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Malaysia's central bank says economy could shrink in 2020 due to coronavirus

A general view of the Central Bank of Malaysia (Bank Negara Malaysia) in Kuala Lumpur.

KUALA LUMPUR (Reuters) - Malaysia's central bank said on Friday the economy could shrink by as much as 2% or grow 0.5% this year due to the coronavirus pandemic, in what would be its worst economic performance in more than a decade.

Malaysia, which has the highest number of reported coronavirus infections in Southeast Asia with more than 3,100 cases and 50 deaths, is in the middle of month-long restrictions on travel and non-essential business that have hit trade and tourism.

"Overall, risks to the domestic growth outlook are tilted to the downside, mainly due the risk of a prolonged and wider spread of COVID-19 and its effects on the global and domestic economy," Bank Negara Malaysia (BNM) said in documents released with its annual report.

Southeast Asia's third-largest economy last reported growth below zero in 2009 due to the global financial crisis. The economy grew 4.3% last year.

BNM said inflation was expected to average between -1.5% and 0.5% this year, lower than last year's 0.7%.

It said monetary operations would continue to support liquidity in the foreign exchange, bond and money markets to ensure uninterrupted financial intermediation.

"We will continue with monetary policy that is accommodative of sustainable economic activity amid low inflation," the bank said, adding it could employ its "policy levers" to cushion the impact of the virus.

The bank's next monetary policy meeting is due on May 5.

(Reporting by Rozanna Latiff; Editing by Sam Holmes)