Malaysia's economy contracted 5.6% in 2020 amid coronavirus restrictions in the country, the country's central bank said on Thursday.
In a statement, the Bank Negara Malaysia said the economy registered a negative growth of 3.4% in the fourth quarter of 2020.
"For 2020 as a whole, the economy contracted by 5.6%. The restrictions on mobility, especially on inter-district and inter-state travel, weighed on economic activity during the fourth quarter," said the bank.
However, except for manufacturing, all the economic sectors continued to record negative growth, according to the bank statement.
For the quarter, headline inflation declined to -1.5%, in part reflecting the larger decline in retail fuel prices as compared to the corresponding period last year.
The local currency appreciated by 3.6% against the US dollar during the fourth quarter of 2020, driven mainly by non-resident portfolio inflows as investors' risk appetite continued to improve.
During the fourth quarter, net financing to the private sector expanded by 4.4% as the government continued to support household and business segments during the pandemic crisis.
In its report, the bank expected that near-term growth in 2021 would be affected by the re-introduction of stricter containment measures. The impact, however, will be less severe than that experienced in 2020.
"The growth trajectory is projected to improve from the second quarter onwards. The improvement will be driven by the recovery in global demand, where the International Monetary Fund (IMF) has revised their 2021 global growth forecast upwards by 0.3 percentage points to 5.5%," the statement further said.
"In line with earlier assessments, the average headline inflation was at -1.2% in 2020 due mainly to the substantially lower global oil prices. For 2021, headline inflation is projected to average higher, primarily due to higher global oil prices."
Last month, Malaysia declared a state of emergency to stem the spread of COVID-19, which could last until Aug. 1.
On Feb. 4, Malaysia announced a mass COVID-19 vaccination campaign would begin by the end of this month.
According to US' Johns Hopkins university data, the Southeast Asian country has reported more than 251,604 cases with 923 deaths while 198,495 people have recovered.
*Writing by Islamuddin Sajid