Malaysia's GDP likely contracted more slowly in third quarter on easing coronavirus curbs, Reuters poll shows

The economy likely shrank 3.2% in the July-September period from a year ago, according to a median estimate of 15 economists, a marked improvement from the 17.1% contraction in the previous quarter.

Malaysia's economy suffered its first slump since the 2009 financial crisis in the second quarter but has since seen a tentative rebound after the government began lifting coronavirus curbs in May and as global demand for its exports of electronics and rubber products surged.

The wide range of forecasts in the Reuters poll underscored Malaysia's uncertain economic outlook, particularly after the government reimposed some restrictions from October as cases rose. Gross domestic product (GDP) forecasts for the third quarter varied from a projected contraction of 8.5% to expectations for 1.3% growth.

"Despite the Q3 rebound, GDP may slow again in Q4 due to the reimposition of mobility restriction measures on a resurgence of infections," said Standard Chartered in a research note.

Factory output rose for a third straight month in September, as manufacturing activity picked up, while exports grew at their fastest pace in nearly two years that same month on higher global demand for manufactured and agricultural goods.

But the government imposed limited curbs on movement across most states in November and banned inter-state travel as coronavirus cases tripled over two months. Coronavirus cases reached more than 42,000 in Malaysia as of Tuesday.

Brian Tan, a regional economist with Barclays, said recent data indicated Malaysia's full-year growth may not be as bad as the 8.5% contraction they initially predicted, but could be weighed down by the latest round of coronavirus curbs.

"We remain cautious on the economic outlook, especially as social-distancing measures have been tightened further in Q4 to head off a surge in COVID-19 infections," Tan said.