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Tuesday, September 29, 2020

Thus ends Sabah distraction, next stop – the recession

 


So today, Sabah Bersatu leader Hajiji Mohd Noor is being sworn as leader of the new state government. Congrats, sir.

The candidacy of his rival, Sabah Umno chief Bung Moktar Radin, is over. In a word Bung-kus.

The people of Sabah have spoken, and I suppose they think that leaders like Bung and Star president Jeffrey Kitingan, two of the most ridiculed MPs in the Dewan Rakyat for their coarse manners and party-hopping, respectively, are a way to restore the dignity that has long been blowing in the wind. Or rather beneath it.

Perhaps the less than can be said about voters that would choose such individuals the better – Bung himself held a press conference on election night, Saturday, flanked by the commander-in-thief who is a convicted felon from Pekan.

A lack of progress in underdeveloped states like Sabah and Kelantan is nothing new. Thus we should not be surprised that the voters there have learnt to revel in this backwardness and embrace racial and religious chauvinism wrapped up in bows of corruption and hypocrisy.

It also doesn't help that the leaders from the other side (at least at the national level) – are looking increasingly out of touch.

Let's be honest - senile is the word.

With his failed gamble of declaring majority support, which would not even have fooled a child of eight, PKR president Anwar Ibrahim took on the role of a laughing stock and court jester to rival Bung's village idiot persona.

And meanwhile, still lurking is a 95-year-old godfather of corruption and racism who has always stayed true to his megalomaniac obsession with power – the dream of New Malaysia be damned.

Galloping to our doom

However, let's return to a different reality and the bigger picture – the looming disaster that is our economic future.

Try as he and his coterie of well-paid spinners might, the Pagoh MP will soon have no choice but to admit that a recession is upon us.

A recession is frequently defined as two consecutive quarters of declines in quarterly real (inflation-adjusted) gross domestic product (GDP).

More specifically, it is a "significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales."

Malaysia actually enjoyed marginal growth of 0.7 percent in the first quarter of 2020, but once the real impact of the movement control order (MCO) kicked in, our numbers were shocking.

Malaysia's GDP contracted an astounding 17.1 percent in Q2 (that's April 1 to June 30) making us one of the hardest economies in the region and giving us similar numbers as the UK (-20.4 percent) and Spain (-18.5 percent) – both of which were much harder hit by Covid-19, with over 42,000 and 31,000 fatalities respectively.

For the same quarter in 2019 we had 4.8 percent growth. In fact, according to the Department of Statistics, our second quarter even trumped the fourth quarter of 1998 (-11.2%) when we were reeling from the Asian financial crisis.

Last month, Bank Negara Malaysia (BNM) revised its official gross domestic product (GDP) growth forecast for 2020 to between -3.5 percent and -5.5 percent – and any economist will tell you that is downplaying the impact of the shutdown.

In announcing the forecast, Bank Negara Governor Nor Shamsiah Mohd Yunus (above) said the second-quarter economic contraction is likely a trough, and therefore the economy is poised for a gradual recovery in the second half of the year and is expected to rebound further in 2021, for which BNM has forecast a growth rate of between 5.5-8 percent. How sweet.

I'd like to believe such an optimistic projection, but mark my words – at some point in October, the Q3 figures will have to come out, and we won't be able to run away from it.

Jobs cuts everywhere

I think we are galloping to our doom.

As far as I can see, the only people with good job prospects are those government backbenchers who have been offered a range of high-paying GLC jobs to ensure their loyalty to a regime that counts on a two-seat majority.

My son, who had been working with Book Excess since 2018, was unceremoniously retrenched in April and has yet to regain steady employment since.

At 23, he is part of the group that academician Lee Hwok Aun was talking about when he said, "unemployment has been rising among 20-24 year-olds, particularly in urban areas, and remains persistently high among 15-19 year-olds", in his paper' Unemployment among Malaysia's Youth: Structural Trends and Current Challenges'.

At my former company Star Media Group, a retrenchment exercise is in the offing. It's the fourth time in seven years that staff headcount will be drastically cut, with an estimated 200-300 jobs on the line.

In fact, the whole of the print media is tottering. You might recall that in April, over 180 staff at Blu Inc Media lost their jobs, when the company closed, shutting 19 publications including Cleo, Female, Her World, Harper's Bazaar, Jelita and Marie Claire.

My friends in events companies have seen revenues flatline. Those in F&B are either closing down or struggling to keep afloat. My musician buddies are dying a slow death, with some having to sell their musical instruments. It's life and death to them but seemed to amuse the PM when he joked about nightclubs staying shut with his friends from the Islamic right-wing.

The travel and tourism industries are hard hit with hotels closing and airlines laying off their staff. In June I was told about impending layoffs at AirAsia, but the airline refused to confirm it.

What is known is that retrenched pilot A Sanjiv Daevin, 35, fell to his death from the 12th floor of his condominium in Bandar Kinrara, Selangor, in an apparent suicide.

Everywhere I turn the situation looks bleak, and Malaysians are asking just who is benefitting from the stimulus packages that are trumpeted every now and again.

In fact, many were hoping for a broad extension of the loan moratorium that's due to expire tomorrow, but that appears increasingly unlikely.

With government debt at RM854 billion or 58.4 percent of the GDP, there really is very little space left for more borrowings for future stimulus packages if required.

As things stand, Malaysians are worried about more waves of Covid-19 and feel that we can't even afford nationwide lockdowns like the one we experienced in April.

Something needs to be done, and the answer is not politicking or a general election. My greatest fear is that the captains who hijacked the ship have no idea what they are doing – beyond securing their own self-interest.

So, a recession will soon be here. Let's hope that this time next year we won't be talking about a looming depression – with price deflation, stock market crashes, free-falling currency exchange rates, bank failures and the like.


MARTIN VENGADESAN is a Malaysiakini team member.

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