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KUALA LUMPUR: Malaysia’s economic recovery will likely be more U-shaped than V-shaped, cushioned by renewed restrictions amid a resurgence of Covid-19 infections, according to Minister of International Trade and Industry Mohamed Azmin Ali.
The government is trying to eradicate the virus without harming businesses by reinstating a national lockdown, Azmin said in an interview with Bloomberg TV. Still, he said, more could be done to flatten the curve of increasing cases.
“It seems like that’s the situation now, but the pace is still slow,” he said when asked about the prospect of a U-shaped recovery.
“The best approach is to adopt MCO to contain the virus, but that will cost the economy,” he said, referring to the motion control order that hit the economy earlier this year.
A growing cluster of infections that emerged in late September forced the government to renew the ban on most social and cultural activities and impose new restrictions on movement in most parts of the country. The restrictions threaten the $ 365 billion economy, just as it was showing signs of improvement.
Malaysia’s gross domestic product contracted at a slower pace in the September quarter, rebounding from a decades-long slump when the nation began easing its lockdown in May. High-frequency indicators since then suggest “strong support” for the revival, Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus said last week.
However, a recent spike in virus cases could change the outlook. New infections across the nation stayed above 1,000 for several days this week and stood at 1,290 yesterday.
Political test
Prime Minister Muhyiddin Yassin’s government will face another challenge next week. The slim majority of the coalition in Parliament will be put to the test when MPs vote on the 2021 budget on Thursday.
The past two weeks have seen MPs on both sides of the aisle withholding their support unless changes are made. Not passing the budget would mean losing a vote of no confidence.
“There is no reason for MPs not to support the budget and defeat it when the budget is intended for the people and economic activities in Malaysia,” Azmin said. “The finance minister has taken all points of view into account.”
Azmin, who was recently appointed director of elections for Perikatan Nasional, said they were prepared to face a general election.
“With our track record over the past eight months, we will secure a larger majority in the next general election,” he said.
However, the virus situation does not justify holding elections at this time, he added.
