The Malaysian Institute of Economic Research (MIER) estimates that around 2.4 million Malaysians could lose their jobs due to the Covid-19 crisis if the movement control order (MCO) is extended for another two weeks.
In a report on the economic impact of the virus’ outbreak, the think tank said the 2.4 million would mainly consist of non-salaried jobs while unskilled workers would make up 67% of the figure.
It also predicted that household incomes would drop 12% from the baseline, amounting to RM95 billion, due to the decrease in consumer spending by 11%.
“Malaysia’s real GDP may shrink about 6.9% relative to the 2020 baseline. This translates into a -2.9% real GDP growth for 2020, relative to 2019.
“In these challenging and unprecedented times, it will be in the nation’s best interest to depart from looking at the economy based on the conventional indicators in normal times,” it said.
MIER called on Putrajaya to allocate a crisis budget relative to the RM95 billion losses, saying this would be needed to prevent companies from filing for bankruptcy, job losses and diminished household incomes.
It added that the government should review the nation’s socio-economic goals, saying it is time to formulate policies to move the economy towards “resilience and genuine prosperity”.
It also urged the government to establish a national food and medical supplies stockpile funded by Putrajaya or through a public-private partnership programme.
“Finally, the government has to review its fiscal policy including Budget 2020 announced by the previous Pakatan Harapan government in order to deal with this new development.”
It recommended that Putrajaya bring back the goods and services tax with an adjusted rate and mechanism in its 2021 budget to cover any losses in revenue from the lower expected oil receipts in the previous assessment.
MIER said full compliance with the MCO was key to preventing further economic ripples.
“Any additional MCO of two weeks may amplify the contraction of real GDP between -3% and -4% relative to the 2020 baseline,” it added.