PM: Impact of current MCO on economy to be manageable

KUALA LUMPUR: The impact of the current Movement Control Order (MCO) to the economy is expected to be manageable and growth will continue to be supported by the strong exports sector and the global trade recovery, Prime Minister Tan Sri Muhyiddin Yassin said yesterday.

“We saw the impact of the MCO implementation on economic growth where Gross Domestic Product (GDP) in the second quarter of 2020 recorded a significant decline, with a significant rise in unemployment rate.”

“Alhamdulillah, with the implementation of the economic stimulus packages, we managed to achieve a smaller GDP contraction rate, from 17.1 to 2.7 percent, and a reduction in the unemployment rate from 5.1 to 4.7 per cent from the second to the third quarter of 2020,” he said when announcing a RM15 billion assistance package PERMAI here yesterday.

Muhyiddin said since the outbreak of Covid-19 early last year, the government has implemented four economic stimulus packages worth RM305 billion, or more than 20 per cent of GDP, to help the people and businesses as well as protect the economy.

He said these economic stimulus packages involved RM55 billion in fiscal injections by the government.

The government does not expect an impact similar to the second quarter of 2020 as the implementation of the current MCO sees more economic activities being allowed to operate, according to Muhyiddin.

“As such, the impact of the current MCO to the economy is expected to be manageable. Growth will continue to be supported by the strong exports sector and the global trade recovery.”

The economic stimulus packages, Budget 2021 and the PERMAI assistance package will continue to boost consumption. Furthermore, high-impact projects and initiatives with significant economic multipliers will continue to drive the economic recovery momentum.

He said the government acknowledges that the implementation of MCO, coupled with the emergency proclamation in force from Jan 11 to Aug 1, 2021 may have raised some concerns among the people and the business community.

“I would like to emphasise once again that this Declaration of Emergency is with the sole intention of curbing the spread of the Covid-19 pandemic, which is currently the biggest threat to the socio-economic development of the country.

“The government will endeavour to do everything possible to ensure that the impact of these measures on the country's economy is contained. In fact, since Jan 11, 2021, it is clear that our capital markets such as Bursa Malaysia and the bond market have remained stable and orderly.

“To finance the PERMAI assistance package, the government will re-allocate existing funds based on current priorities and through more prudent spending. The government will also ensure that all initiatives announced are implemented expediently and effectively,” he said.