KUALA LUMPUR: The global economy is expected to contract this year as the ongoing Covid-19 pandemic has significantly weakened growth prospects, Bank Negara Malaysia said today.

The central bank, in its 2019 Annual Report, said the International Monetary Fund has projected a recession for 2020 which is at least as bad as the global financial crisis in 2009, before recovering in 2021.

“The pandemic has evolved into a global health crisis that is causing a sharp growth slowdown in affected countries, including most major advanced economies.

“The measures taken to contain the spread of Covid-19, including travel restrictions, enforced business closures and restricted social activities, while critical, are suppressing private sector activity,” Bank Negara said.

The latest indicators, Bank Negara said, suggest that global growth will be significantly weak in the first half of the year.

The Purchasing Managers’ Indices (PMIs) for manufacturing and exports, which were showing incipient signs of recovery towards end-2019, declined sharply in the first three months of 2020.

The impact of China’s extended production shutdown and quarantine between late January and March is evident in the marked decline in the PMI for emerging markets.

As advanced economies adopted similar containment measures in March, a similar trajectory was also observed, Bank Negara said.

https://www.nst.com.my/business/2020/04/580861/bank-negara-world-economy-recession