Coronavirus spread to affect VM2020 campaign: Kenanga

With the Coronavirus continuing to spread and the Chinese government imposing travel curbs on Wuhan and seven other cities in the country, the virus outbreak is likely to affect the Visit Malaysia 2020 campaign.

Kenanga in its research note today said the immediate concern is that the virus may spread fast, helped by the heightened travelling activities during the Lunar New Year, with the impact on tourist arrivals from China and elsewhere enough to affect VM2020.

“This would affect the economy to a certain extent, at least in the first half of 2020.

“Similar to the SARS virus outbreak in 2003, we expect the Malaysian government to take pre-emptive fiscal and monetary measures to support the tourism as well as the retail and transport sectors, as the impact would risk a wider fiscal deficit and higher debt ratio to the gross domestic product,” it said.

It added that barring a full-blown epidemic or a death toll increase at an alarming rate, it is maintaining its forecast of 4.3 percent for this year compared with the official 2020 forecast of 4.8 percent.

“Given the acceleration in the pace of the spread of the virus, especially due to heightened travelling activities during the Lunar New Year holidays, we foresee an elevated level of worries among consumers, potentially resulting in some adverse spillover to the economy,” it said.

As of today, the virus has spread to at least nine countries, including Thailand, Japan, Korea, Hong Kong, Taiwan, Macau, Singapore, Vietnam and the US, with 18 deaths recorded.

In 2003, the SARS outbreak seeped into the economy mainly through the confidence and demand channels, with the adverse impact materialising in late March and lasting until end-May, after which it gradually abated.

The research house said the economy expanded at a softer pace, registering a six-quarter low, purely due to the services sector, specifically a sharp fall in the wholesale and retail trade, as well as the hotels and restaurant sub-sector.

“Tourism activities tapered, with tourist arrivals charting a downtrend for two straight quarters and remaining on a downtrend up until 2005,” it said.

- Bernama