‘MALAYSIA FACING ITS WORST RECESSION’
Recession affecting GDP, led to rise in unemployment, says finance minister
MALAYSIA is weathering its worst economic recession in its history just as other developed nations are going through it due to the Covid-19 pandemic and Movement Control Order (MCO).
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said the recession not only affected the nation’s gross domestic product (GDP), but had also contributed to a rise in unemployment.
“The important thing here now is how fast we can manage this pandemic situation. If we can manage the situation swiftly, our nation’s economy and development can also recover swiftly.
“I am not sure when we can come up a vaccine for Covid-19, but with the help of the people, the government and everyone involved, we can help manage the situation and help the economy recover.”
Tengku Zafrul said this during a special interview on TV3 at Sri Pentas in Petaling Jaya yesterday.
He said the nation’s income had been affected by the recession, with the economy haemorrhaging RM2.4 billion daily.
He said in the first two weeks of the MCO, the country’s economic growth, which was previously at two per cent, had declined to 0.5 per cent, while the GDP in the five weeks of the MCO was expected to decline between three and four per cent.
“If there was no Prihatin Rakyat Economic Stimulus Package, the decline in GDP would have been more pronounced. The Prihatin package can generate GDP at 2.8 per cent. Therefore, this package is important to help the economy recover in the short and medium terms.”
On Malaysia’s debt compared with its GDP, Tengku Zafrul said the GDP to debt ratio stood at about 51 per cent (ceiling is 55 per cent). He said following the disbursement of funds from the RM35 billion Prihatin package, the GDP and budget deficit stood at 4.7 per cent.
On oil price, he said the price for a barrel of crude oil was between US$20 and US$25, and due to the current price status (low price), the nation’s deficit had increased slightly from 4.7 per cent to five per cent.
“We need to remember that during the global financial crisis in 2009, our deficit budget stood at 6.7 per cent, and currently, if we look at the Prihatin package and the crude oil price, our deficit would be estimated from 4.7 per cent to five per cent.”
Asked if there was a need to amend the debt ceiling, he said at the moment, there was no need for changes as the country’s overseas debt was between two and three per cent.
“The overseas ceiling debt is about RM35 billion, but we have more space.
“The most important thing here is all the countries involved are facing the same problem. They have to borrow or carry out the stimulus package to help the people and economy.”
He said the government would announce an economic recovery package at the end of the month and the budget would be tabled in November.
On whether the government was rushing into opening the economy with the Conditional MCO beginning tomorrow and whether there were quarters that pressured the government into doing so, he said there was no rush.
He said the move was made based on studies and data, and followed the standard operating procedure (SOP).
He said companies or restaurants that chose not to resume operations from tomorrow could do so and the government would not force them to operate.
“I know some companies are not ready nor are they confident to open or operate their business although the government has allowed them do to so starting this Monday. We will not force them.
“I am sure they are in the midst of informing the government that they will open (for business) a week after May 4 as they need to invest in a new SOP, as required by the Health Ministry.
“And not all economic sectors or companies are allowed to operate beginning Monday.”
He said the government would ensure that the people would be kept employed with initiatives and assistance despite many workers having been retrenched.