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By Peter Sibon
KUCHING, March 25: The third wave of the Covid-19 pandemic, coupled with the extension of the Movement Control Order (MCO) for another two weeks, will have a direct impact on the Malaysian economy and adversely affect those in the B40.
According to Dr Madeline Berma, a fellow of the Academy of Sciences Malaysia, if the MCO was prolonged, the shutdown will lead to business failures and layoffs which will exacerbate the economic downturn.
“It will eventually lead to a recession. In my opinion, those affected the most by economic slowdown are the B40 who are mostly petty traders, daily paid workers, families headed by single-women, elderly pensioners, handicapped.
“Many of them are with very small or even no savings in the bank and EPF (Employees’ Providence Fund). So they cannot withdraw. The cash incentives helped them, but with limited impact. Also, I am concerned that the loss of income will lead to an increase in household debt,” she said in a statement today.
She pointed out that the Malaysian Institute of Economic Research had revealed that the prolonged MCO will lead to Malaysia’s real gross domestic product (GDP) to shrink by about 2.9 per cent for 2020 compared to 2019 baseline.
“The study also showed a contraction of real GDP by between 3 per cent and 4 per cent, household incomes may fall by 12 per cent relative to the baseline and result in some 2.4 million people losing their jobs.
“And there was a sharp reduction in the stock prices. Bursa Malaysia KLCI dipped to 1,239.01 Last week, a retraction of more than 28 per cent from the end of December 2019, when it stood at 1,588.76 points,” she said.
Madeline stressed that there will be a slowdown in retail, logistic, tourism, services and manufacturing sector. Many of those daily-paid workers, informal traders, and small-scale business will be without income for two weeks due to partial lockdown.
“(However) the online-business, especially food delivery, pharmacies, supermarkets, fast food chains will experience an increase in sales,” she said.
She added that the United Nations Trade and Development Agency estimated the slowdown in the global economy caused by the Covid-19 outbreak likely to cost at least USD1 trillion.
“The world financial markets will be affected due to supply-chain interruptions from China, and rapid reduction in Brent crude oil prices to US$30per barrel,” she said.—DayakDaily