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Malaysia’s economy contracted 5.6 per cent in 2020

Gross Domestic Product (GDP) by State 2009

Release Date : Thursday 25, November 2010 12:00 pm
Last Updated : Friday 10, April 2015 11:50 am


1. The global financial crisis was led to a sharp contraction of the global economy in 2009. The economic downturn was registered in several countries such as United States, Euro area, Japan, Singapore and also Malaysia. Growth in Malaysian economy contracted by 1.7 per cent due to a significant drop in Manufacturing sector (-9.4 per cent) while Mining & Quarrying sector shrank 3.8 per cent. Nonetheless, the positive trend recorded by the Services and Construction sectors counteracted the overall downturn momentum.

2. In tandem with the contraction at national level, the performance of state level showed disparity with most of the states registered a negative growth. As shown in Chart 1, the highest contraction of GDP in 2009 was recorded by Pulau Pinang with -10.8 per cent resulted from a sharp decline in the Manufacturing sector (-20.2 per cent). Sub-sectors which led to the decline were Manufacturing of Office, Accounting & Computing Machinery and Manufacturing of Radio, Television & Communication Equipment & Apparatus. The scenario is consistent with the downturn in both sub-sectors at national level which decreased substantially to -29.1 per cent and -15.2 per cent respectively.

Chart 1: GDP Growth (%) by State at Constant Price 2000 Year 2009

3. The fall of Electrical & Electronics segment also contributed negative impact to the states which were highly dependent on this industry. Selangor which registered the highest GDP growth in previous year also affected by this downturn. GDP of Selangor shrank to -1.6 per cent from 8.4 per cent in 2008. Similarly, Johor contracted -4.2 per cent, Kedah (-1.6 per cent) and Perak (-1.0 per cent). Nevertheless, Negeri Sembilan and Melaka continued to expand albeit a contraction of the Manufacturing sector due to positive growth in Construction, Agriculture and Services sector.

4. Economic performance of WP Kuala Lumpur continued the upward trend with 3.8 per cent, the highest growth amongst all states, driven by the favourable performance of the Services sector. The second highest was recorded by Sabah at 3.3 per cent, boosted by encouraging growth in crude oil production. While for Kelantan, an increase of 3.1 per cent was recorded, supported by the Services and Construction sector.

5. Dependency on certain economic activities led to a different impact of growth in GDP. Services sector was the main driver to GDP of WP Kuala Lumpur (88.9 per cent), WP Labuan (74.2 per cent), Kelantan (74.1 per cent), Perak (66.1 per cent), Selangor (58.1 per cent), Perlis (57.9 per cent) and Johor (52.3 per cent). The contribution of Manufacturing sector was dominant in Pulau Pinang with 47.7 per cent, Negeri Sembilan (48.6 per cent) and Melaka (44.6 per cent). In line with the decline of the sector at national level, the percentage of its contribution to those states was reduced as compared to the previous year. In general, Services and Manufacturing contributed more than 90.0 per cent of the total state's GDP. Nevertheless, there were several states which have different characteristics such as Sabah, Sarawak, Pahang, Kedah and Terengganu. These states were also driven by Mining and Agriculture sector as the agent of growth.

6. From the sectoral point of view, 47.0 per cent from Services sector in Malaysia was contributed by WP Kuala Lumpur and Selangor (refer Table 1) with WP Kuala Lumpur registered the highest value added of RM 68.5 billion at constant price for year in 2009. The growth was mainly stimulated by Finance & Insurance, Business Services and Real Estate sub-sector.

Table 1: Percentage Share (%) by State at Constant Price 2000 Year 2009

7. The Manufacturing sector contributed mostly from Selangor followed by Pulau Pinang, Johor and Sarawak. The contribution of these states was 64.6 per cent of its total value added. Beside the negative growth in Electrical and Electronics by most of the states, other sub-sectors that contributed to the decline in Manufacturing sector were Motor Vehicles & Transport Equipment, Wood Products, Basic Metals, Beverages, Food Processing and Tobacco Products.

8. Agriculture sector remain dominated by Sabah and Sarawak with total contribution of 38.3 per cent of national level. However in year 2009, Sabah registered a negative growth of 5.0 per cent, while Sarawak recorded a marginal growth of 0.6 per cent due to contraction in Oil Palm and the Forestry & Logging sub-sector. Johor which expanded 4.7 per cent, Pahang (1.0 per cent) and Perak (1.9 per cent) also brought a significant contribution to the Agriculture sector. Food Crops and Fisheries sub-sector were amongst the contributor to this growth.

9. As for Construction sector, the growth of Selangor (4.5 per cent), WP Kuala Lumpur (9.2 per cent) and Johor (14.0 per cent) reflected the overall scenario at the national level (5.8 per cent). This sector was dominated by Selangor with 37.8 per cent, WP Kuala Lumpur (15.8 per cent) and Johor (10.5 per cent). Most states also showed a positive impact due to the implementation of the first and second stimulus packages