KUALA LUMPU: Economists believe Malaysia will suffer an economic recession if the Covid-19 outbreak continues to worsen and the Movement Control Order (MCO) is extended.
Institute for Capital Market Research Malaysia (ICMR) board of directors chairman Tan Sri Dr Mohd Munir Abdul Majid said the ongoing “twin crises” of health and economy necessitated the government to formulate bold and creative solutions.
Munir pointed out that the economy was not doing well even before the outbreak.
“The pandemic has hit the global economy, which is in a state of seizure, careening towards a great big recession. The government must be bold and imaginative.
“Health must come first but as you make every effort to address it like the MCO, there is an adverse impact on the economy (which is) not doing well even before Covid-19.
“It (government solution) must support the people and companies that employ them. If the companies collapse, the people will be out of work.
“Like the superb Chancellor of the Exchequer in the United Kingdom, Malaysia must have its own ‘all that it takes’ moment. I have yet to see that,” he said.
He suggested for the government to emulate measures taken by South Korea when the country conducted mass screenings, in which the results would be known in six hours with almost 100 per cent accuracy.
Asked what would he expect from the upcoming second phase of the stimulus package, which is expected to be announced March 30, Munir said the government did not need to be “obsessed” and driven into the fear of widening fiscal deficit.
“This is a huge crisis which calls for, as I said, bold and imaginative thinking.
“The prime minister’s statement today (yesterday), while cool, calm and collected, did not offer any (plans of) government financial attack on the twin crises, except for that bit of money for the Health Ministry and some to be distributed — I hope not dissipated — among the states.
“The government’s concentration and spending on (combating) Covid-19 does not mean it should not spend on the economy as well.
“There is plenty of liquidity in the banking system that the government should draw on. The thing is to make sure we spend the money well without leakages, corruption, unnecessary administrative costs and delays.
“The government must be transparent, efficient and accountable for the money it has to borrow,” Munir said.
Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the economy was almost at a standstill as business activities and performance were affected.
Afzanizam expected an output loss of which would heighten the risks of economic recession.
“I think it is almost certain that the global economy is heading towards a recession.
“What we are facing now is that the global economy is almost at a standstill following measures such as lockdowns, partial lockdowns and state emergencies in various parts of the world, especially in the advanced countries.
“Being an open economy, Malaysia could also be exposed to such risks. At this juncture, it is difficult to give economic forecast with a high degree of precision as the prevailing situations are very fluid,” he said.
Afzanizam said the government should focus on healthcare and efforts to contain the virus’ spread.
He pointed out that the government should ensure the sufficiency of food supply if the MCO was to be extended.
“Also, employees in the informal sector, the government need to ensure that their loss of income can be mitigated by way of direct transfers.
“This category of employees will not have a proper social safety net such as Social Security Organisation, Employees Provident Fund and health coverage.
“Others would be measures to address household, corporate and small-medium enterprises indebtedness. So far, the measures have been targeted to the affected sectors.”