https://www.instagram.com/p/CAH7K4vHJNI/In the first quarter of 2020, almost all countries across the world were hit hard by COVID-19 outbreak began late December 2019 in Wuhan, China which eventually led to global health and economic crisis. Some countries have taken measures for instance total and partial lockdown while implementing best practices recommended by the World Health Organization (WHO) to curb the spread of COVID-19. Such measures caused a slowdown in some economic activities because of movement restrictions and operated at minimal resources with limited operating hours. However, some economic activities have no choice but to totally freeze their operation especially in travel related activities which affected the most by this unprecedented situation. Still, economic activities related to essential services need to be operated to fulfil the health care and basic household consumption needs.
China recorded a deficit in the current account which stood at 29.7 billion U.S. dollars in the first three months of this year after recording a surplus in six consecutive quarters previously. This was due to anemic demand in travel and transports sectors of services account caused by the pandemic. Nonetheless, some advanced and emerging economies such as Japan, Korea, Italy, and Thailand continue to record a surplus in current account despite of COVID-19.
As for Malaysia, the current account balance recorded a surplus of RM9.5 billion in the first quarter of 2020 led by the continuous surplus in goods account. Besides, the higher surplus was also due to smaller deficit in Primary income. Financial account registered a higher net outflow of RM13.3 billion due to higher outflow in Portfolio investment.
Goods account registered a lower net exports of RM28.9 billion in the first quarter of 2020. Export of goods decreased 9.5 per cent (quarter-on-quarter) to RM190.7 and similar trend was also observed in import of goods that declined 9.3 per cent (quarter-on-quarter) to RM161.8 billion.
Meanwhile, services account registered a wider deficit of RM8.0 billion as against RM4.0 billion in preceding quarter, mainly caused by the gloomy travel activities which was hit hard the pandemic. Travel recorded a lower surplus of RM2.1 billion in the first quarter of 2020, the lowest since third quarter of 2003 due to SARS epidemic. Nevertheless, some components of services account such as telecommunications, computer and information and other business services performed well in this quarter despite of the crisis.
The primary income account recorded lower deficit of RM6.0 billion due to economic disruption and caused foreign companies in Malaysia to earn lower income. The secondary income account posted a lower deficit of RM5.4 billion, contributed by lower payments.
Financial account registered a higher net outflow of 13.3 billion ringgit in the first quarter of 2020, primarily contributed by higher outflow in Portfolio investment due to redemption upon maturity and selling off debt securities by non-residents.
FDI increased to RM 6.4 billion ringgit mainly from USA, Singapore and Ireland in Manufacturing, Financial and Mining sectors. Similarly, DIA also recorded a higher net outflow of 3.0 billion ringgit generally to United Kingdom, Indonesia and Canada.
Click here for full report of Malaysia’s Q1 2020 Balance of Payments (BOP)
Click here for key indicators used in BOP compilation
Prepared by:
Veronica S. Jamilat, Principal Assistant Director, Balance of Payments Division
The views expressed are those of the author and do not necessarily represent the views of the DOSM.
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