Wuhan fallout
Flu outbreak likely to have significant negative impact on economy
PETALING JAYA: The fallout from the outbreak of the Wuhan flu will be significant and it will be on a global scale.
There will be slower economic growth as various sectors, particularly the automotive industry and trade will take a hit.
But it is the tourism sector that is likely to suffer the greatest impact of an expected reduction in travel.
On the other hand, manufacturers of rubber gloves have already ramped up production in anticipation of higher demand.
Universiti Tun Abdul Razak economist Prof Dr Barjoyai Bardai expects the reduction in trade to have a significant impact on Malaysia.
“China is Malaysia’s largest trading partner,” he pointed out.
“China’s consumption of fuel will go down by 20% and this will affect fuel exporters worldwide,” he told the Sun.
Malaysia is a country that exports oil and gas.
He was commenting on announcements by Economic Affairs Minister Datuk Seri
Mohamed Azmin Ali and Finance Minister Lim Guan Eng that the government is mulling a stimulus package to boost the economy in response to the spread of the novel coronavirus that causes the flu.
Barjoyai said food imports from China will decline in the coming months as Malaysians are likely to view them with caution now.
He noted that those who are suspected to have the flu must undergo a 14-day quarantine.
“If workers at the automotive production plants in China are affected, it will bring operations to a stop. Malaysia imports a lot of parts from China and our automotive industry will be badly affected.”
He said a decline in travel will also have a negative impact on tourism.
“About 30% of tourists to
Malaysia are from China. We may
even see fewer tourists from other parts of the world.”
Malaysia received just over 30 million visitors last year.
On gross domestic product (GDP) growth, Barjoyai said consumption is likely to decline and this can cause an economic slowdown. The government had earlier forecast a 4.5% GDP growth this year, the same as in 2019.
He said while a stimulus package may be good, it is better to use the money for longerterm efforts to put the economy back on its feet. “For instance, the money can be used to retrain and re-skill manpower so we have a new batch of skilled employees that will help to revive the economy,” he said.
Malaysia-China Chamber of Commerce (MCCC) president Datuk Tan Yew Sing expects trade between Malaysia and China to be adversely affected but he is “cautiously optimistic” that China will have an effective way to contain the outbreak.
He said the MCCC has formed a task force to assess the situation and to express support for those affected by the outbreak.
Malaysian Rubber Glove Manufacturers Association vice-president Dr Supramaniam Shanmugam said while the epidemic is not a good thing, rubber glove manufacturers must ramp up production to ensure there is sufficient supply at the frontline of the crisis.
He noted that the demand has doubled as increased orders are coming in not only from their customers in China but locally as well.
Apart from health workers, non-governmental organisations are also buying the gloves in large quantities as part of their goodwill and corporate social responsibility undertakings.
Malaysia is the world’s largest producer of medical rubber gloves and made-in-Malaysia gloves carry the hallmark of quality, Supramaniam said.
“When we increase production, it does not mean we compromise on quality. We ensure the quality is consistent and to do that, manufacturers will offer their employees higher incentives to work overtime,” he added.