COMMENT | The latest economic performance data for the third quarter (Q3) of 2021 showed that Malaysia is in a technical recession, which the US Federal Reserve defines as two successive quarters of economic contraction.

It is the second time in two years that this has happened and in both cases, the cause is clearly the lockdown policy imposed by the government.

This has been noted recently by former prime minister Najib Abdul Razak, and it deserves some attention when politicians recognise the implications of the overreaction of the lockdown measures.

However, as is often the case in economics, the story is not quite so simple. Malaysia’s economic slowdown started well before the Covid-19 shock, with weak growth in Q3 and Q4 of 2019.

It became worse after the first lockdown caused the recessionary phase in Q2 and Q3 last year. The deep 17.2 percent contraction of GDP year-on-year in Q2 2020 made Malaysia one of the worst performers in the top six Asean economies.

The lockdowns in 2021 repeated the 2020 experience with GDP contracting in two successive quarters by 1.9 percent quarter-on-quarter or 16.1 percent year-on-year in Q2 and 3.6 percent quarter-on-quarter or 4.5 percent year-on-year in Q3.

When compared with the top six Asean countries...