Contain Covid-19 by mid-year to boost investors’ confidence, says economist

 

An economist says finance minister Tengku Zafrul Aziz’s projection that the country’s gross domestic product will grow up to 7% was unrealistic.

PETALING JAYA: Malaysia’s economic growth for the year will depend heavily on the effectiveness of the national Covid-19 vaccination programme, say economists.

Bank Islam Malaysia Bhd’s chief economist Mohd Afzanizam Abdul Rashid said the vaccination programme should be carried out immediately in order for the country to achieve herd immunity, whereby 70% of the population is vaccinated.

“Once this is done, the process of opening up the economy can be facilitated and this will restore the confidence of foreign investors,” he told FMT.

However, Afzanizam said finance minister Tengku Zafrul Aziz’s projection that the country’s gross domestic product (GDP) will grow up to 7% was unrealistic, adding that the government should review its projection according to the country’s current situation.

Bank Islam Malaysia Bhd’s chief economist, Mohd Afzanizam Abdul Rashid.

Ahmed Razman Abdul Latiff, of Putra Business School, said it was unlikely for the country’s economy to grow unless the Covid-19 crisis was contained by the middle of this year.

Failure to achieve this, he said, could result in “chronic unemployment” involving as many as one million people.

Last year, Tengku Zafrul said he expected the economy to recover in 2021, based on global developments and the government’s plan to roll out the vaccine later this year.

He had cited the World Bank and International Monetary Fund’s forecast for Malaysia’s GDP in 2021, which was between 6% and 8%.

But economists remain doubtful over such projections, following a state of emergency  declared and the movement control order (MCO), imposed in several states and the Federal Territories.

Afzanizam predicted that areas under the MCO could be severely affected if the lockdown was extended, which would impact the country’s overall economy.

He added that Malaysia’s current unemployment rate was expected to remain high due to several restrictions imposed upon private companies, some of which were main contributors to economic growth.

Meanwhile, Razman said any prolonged political instability in Malaysia would put the country at risk of experiencing a “V-shaped recovery” throughout 2021.

He urged Putrajaya to expedite the Prihatin Phase 2 payments to encourage people to spend and stimulate the local economy.

“The government needs to speed up distribution of allocated funds from the 2021 budget to targeted groups. Efforts should also be made to expand wage subsidies to workers in other sectors, not just those in tourism and retail,” he added. - FMT