KUALA LUMPUR: The recently announced Prihatin Rakyat Economic Stimulus Package is expected to contribute an estimated 2.8 per cent to the country’s Gross Domestic Product (GDP) this year.
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said the RM250 billion stimulus package, which was unveiled by Prime Minister Tan Sri Muhyiddin Yassin, was formulated to address the adverse impact of the ongoing Covid-19 outbreak in the country.
“Prihatin was driven by three objectives: protect the people, support businesses and strengthen the economy. Initiatives under Prihatin were rolled-out within days of its announcement. Towards this end, Prihatin will contribute an estimated 2.8 per cent to the GDP this year,” he said in a statement.
He also commented on Bank Negara Malaysia’s statement yesterday on how the country’s economy was expected to contract to -2.0 per cent or grow by up to 0.5 per cent this year.
He said this projection was expected because of the current global economic slowdown brought about by the pandemic.
Tengku Zafrul said lockdowns to contain the pandemic across countries worldwide disrupted both supply and demand chains, and Malaysia was not spared from this global situation.
“Domestic conditions continue to be challenging as the threat of Covid-19 has impacted all facets of the nation.”
He said there were close engagements between government and members of the business community this week, particularly concerning micro-businesses and small and medium enterprises (SMEs).
“We have collated and considered all feedback, and certain areas have been identified for fine-tuning and improvements.
“Next week, our prime minister is expected to announce further support measures for Malaysian micro-businesses and SMEs.”
On whether economic recovery was possible this year, Tengku Zafrul said it depended on how well and quickly Malaysia can overcome the threat of Covid-19.
“As mentioned by our prime minister; ‘we are a nation at war with invisible forces’, all Malaysians must play their part and be united in responding to the fight against Covid-19.
“And let us add that while the threat may be invisible, it is certainly not undefeatable.”
He said the current outlook forecasts the nation’s economy to rebound in 2021 with some recovery expected towards the later part of 2020.
“Yet, downside risks remain as the Covid-19 situation is unprecedented and we need to expect the unexpected. Nevertheless, we have the capacity and fiscal space to meet future uncertainties, and the government is fully aware of the need to be agile and to respond swiftly.”
Tengku Zafrul said to steer the country through these challenging times, the central bank will ensure that the financial system remains stable with deep liquidity and strong buffers.
“As it stands, the financial system today has RM121 billion in excess capital buffer, as compared to only RM39 billion during the global financial crisis of 2008.
“On the capital market side, the Securities Commission and Bursa Malaysia will continue to ensure that markets stay open, transparent and orderly.”