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KUALA LUMPUR (May 13): Negara Bank Governor Datuk Nor Shamsiah Mohd Yunus said today that the Covid-19 pandemic “will severely affect” the country’s economic growth in the first half of this year, particularly the second quarter , given the sudden and almost complete halt to economic activities in the first three phases of the movement control order (MCO) from March 18 to May 3.
And the unemployment rate is likely to exceed the bank’s previous forecast of 4%, issued in April, amid extended MCO and weaker demand. In particular, company closings will lead to higher unemployment rates in April and May, he said.
However, he said the country’s economic growth will improve in the second half of the year, with accelerated growth in 2021, as trading partners resume economic activities.
He also noted health-related industries, such as pharmaceuticals and medical supplies and equipment, that appeared to have registered significant growth during the outbreak.
“Malaysia is the world leader in the manufacture of medical gloves and supplies more than half of the world’s medical gloves. Another sector is electrical and electronic (E&E), players are connected to the global technology value chain and are present in segments that facilitate remote work.
“We are connected to the supply chain in China, which is beginning to show signs of economic recovery. So Malaysia is well positioned to benefit from the global recovery, ”he added.
Another structural change includes the robustness of local logistics operators, which is seen to help ease the momentum of online shopping, and the central bank has already witnessed an increase in employment in retail delivery services.
Transportation companies, he said, have also quickly redesigned their services to create an online ordering and delivery platform for local food and beverage businesses that were not previously digitally connected, which has helped micro and small businesses stay on the MCO.
He also noted that some companies have taken advantage of the “new normal” by undertaking structural developments to accelerate the adoption of technologies, in line with social distancing measures, amid the coronavirus outbreak.
He stressed that companies must devise a long-term strategy that includes measures to adapt and take advantage of the digitization trend, to ensure their sustainability and competitiveness.
With the expected recovery in economic activities in the second half of this year, the labor market should gradually improve as a whole, with rehire and job creation in some sectors, he said, given the gradual lifting of the MCO.
“The most vulnerable groups come from tourism-related, export-oriented manufacturing, and these industries account for 45% of local employment. Once the MCO is lifted, we will see an improvement in employment to rehire at different levels in different economic sectors, ”said Nor Shamsiah.
Meanwhile, the government has taken various measures to safeguard jobs, mitigate loss of income and develop human capital, in order to reduce the adverse effects of Covid-19 on the labor market, he said.
These include the Employment Insurance Plan, the Salary Subsidy Program, the Employment Retention Program, and the Reskilling and Upskilling Initiatives.
