EMCO may cause domestic spending activity to weaken
KUCHING: Limited movement in the country could cause domestic spending activity to weaken because of reduced outdoor consumption during the Conditional Movement Control Order ( CMCO) and Enhanced MCO (EMCO), particularly if the MCO is extended beyond October.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) recapped that the recent resurgence of Covid19 cases had led the government to introduce targeted MCO in Sabah, Selangor, Kuala Lumpur, Putrajaya and red zone areas.
“The targeted MCO has been extended for another two weeks as the new cases of Covid-19 rose at a record pace,” MIDF Research said in its latest Weekly Money
Review.
“In general, the limited movement could cause domestic
spending activity to weaken because of reduced outdoor consumption during the CMCO and EMCO, particularly if the MCO is extended beyond October 2020.
“Consequently, the fourth quarter of 2020 (4Q20) growth outlook may be downgraded because of weaker domestic demand.”
That said, with businesses generally are allowed to operate, the research arm estimated the impact thus far to be rather limited vis-à-vis the MCO experience earlier this year.
To note, the International Monetary Fund (IMF) highlighted that global growth has been revised up since the June 2020 World Economic Outlook (WEO) Update to -4.4 per cent in 2020, because of better-than-expected second quarter outturns in some major countries where activity began to improve sooner than expected after lockdowns were scaled back.