Economy to reach tipping point after EPF withdrawals, says economist

 

The i-Sinar withdrawals made by Malaysians from their EPF accounts is actually the main stimulus that the people are getting in 2021, says Geoffrey Williams. (Bernama pic)

PETALING JAYA: An economist says a tipping point is on the horizon as the i-Sinar withdrawals from the Employees Provident Fund (EPF) are disbursed.

According to Geoffrey Williams of the Malaysian University of Science and Technology (MUST), based on the current trajectory it is likely Malaysia’s economy will take years to reach pre-pandemic levels.

He was speaking at a webinar as part of the “Future Malaysia Discourse Series” tonight.

Williams said Malaysians were also in the middle of a “survival trap”, with those making EPF withdrawals likely drawing on some of their last funds as they hope to ride out the pandemic.

The different scenarios Malaysia could face depends on the impact of the i-Sinar withdrawals from EPF on the economy.

“This injection of money (from EPF) is actually the main stimulus that we are getting in 2021. Without this, I think the government would be really quite stuck on where to get money because it has already reached the limits of its resources.”

He added that once these withdrawals are disbursed completely, the state of the economy at that point will provide an insight into the near future of Malaysia’s economic status.

“We feel that we’re going to face a tipping point in the economy where, if this stimulus package has not had the effect that we had hoped, then the economy may tip into a further period of stagnation, or even mild recession.

“If there is a downturn in the global economy, then that might lead us even into a much stronger recession or even a depression,” he said.

GDP forecast suggests Malaysia will not recover to its pre-pandemic level until mid-2022.

Williams added that based on current trends the country’s economy could see a period of modest growth in the 3-4% range, which he categorises as a weak recovery.

He pointed out that the events of 2020 set Malaysia’s gross domestic product (GDP) back to 2018 levels, adding that his projections don’t have Malaysia’s GDP recovering to pre-pandemic levels until mid-2022.

“Recovery isn’t just about seeing the economy start to grow again, it means getting back to where we were.” - FMT