‘Malaysia Facing Worst Economic Recession in Its History’
Posted On May 2, 2020
KUALA LUMPUR: Malaysia is weathering its worst economic recession in its history just as other developed nations are facing deep downturns due to the Covid-19 pandemic and Movement Control Order (MCO).
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said the recession has not only affected the nation’s gross domestic product (GDP) but also contributed towards a rise in unemployment.
“The important thing here now is how fast we can manage this (Covid-19) pandemic situation. If we can manage the situation swiftly, our nation’s economy and development could also recover swiftly.
“I am not sure when we could come up the vaccine for Covid-19, but with the help of the people, the government and everyone involved, we can help manage the situation and help the economy recover,” he said.
Tengku Zafrul said this during a live special interview on TV3 at Sri Pentas here, today.
He also revealed that the economic recession has impacted the nation’s income, with the country hemorrhaging RM2.4 billion daily.
Tengku Zafrul added that in the first two weeks of the MCO, the country’s economic growth, which was previously at two per cent, declined to 0.5 per cent; and within the five weeks of the MCO being implemented, the GDP is expected to decline between three and four per cent.
“If there was no Prihatin Rakyat Economic Stimulus Package, the decline in the GDP would be more pronounced. The Prihatin package can generate up to 2.8 per cent for the GDP.
“Therefore, this package is important to help the economy recover in the short and medium-term,” he said.
On oil prices, Tengku Zafrul said the price for a barrel of crude oil is between US$20 and US$25. Due to its current low price, the nation’s fiscal deficit has increased from 4.7 per cent to five per cent.
“We need to remember that during the global financial crisis of 2009, our budget deficit stood at 6.7 per cent. If we look at the Prihatin package and the crude oil price, our deficit is estimated to be between 4.7 per cent and 5 per cent,” he said.
On Malaysia’s current debt status ratio to its GDP, Tengku Zafrul said it stands at about 51 per cent (the ceiling being 55 per cent).
Asked if there is a need to revise the country’s debt ceiling limit, Tengku Zafrul said at the moment, there is no necessity. This is because the country’s overseas debt is between two and three per cent.
“The overseas ceiling debt is about RM35 billion but we have more space. The most important thing here is that all countries are facing the same problem. They have to borrow or carry out fiscal stimulus measures to help their people and their economies,” he said.
Tengku Zafrul also said the government will announce an economic recovery package by the end of this month and the budget will be tabled in November.
On whether the government is rushing into opening the economy with the Conditional MCO, which will come into force on May 4, and if some quarters had pressured the government to do so, Tengku Zafrul answered in the negative.
He said the decision to open the economy was made based on studies conducted, as well as on data collected, and follows standard operating procedures (SOP).
Meanwhile, he said that companies which decide against resuming operations on May 4 can do so, and the government will not force them to operate, he added.
“I know that some companies are not ready, nor are they confident to open or operate their business, although the government has allowed them to do from starting this Monday, we will not force them.
“I am sure that they are in the midst of informing the government that they will open (for business) a week after May 4, as they need to invest in the (new) SOPs that are required by the Health Ministry,” he said.
Tengku Zafrul also said that not all economic sectors or companies are allowed to operate beginning Monday.
He also said that the government will ensure that the rakyat will be kept employed with initiatives and assistance, despite many workers having been retrenched.