Malaysia to lose 2.4 million jobs, impending recession due to Covid-19
About 67% of these jobs are unskilled and they mostly involve workers who do not earn a monthly salary, said Mier in its latest study on the impact of the Covid-19 outbreak and the movement control order (MCO).
These are the first such projections by any think-tank of the overall impact on the economy by Covid-19 which to date has killed 16 people and infected 1,624 in Malaysia.
The think-tank said a cumulative total of RM95 billion in household income is expected to be lost, which is a 12% drop from its baseline level before the MCO was instituted on March 17.
Due to the projected amount of income lost, Mier urged the government to pledge an additional RM75 million in a second stimulus budget on top of the RM20 million it had already earmarked.
“Such an allocation will be imperative especially to avoid company bankruptcies, loss of jobs, and impaired household incomes and welfare through business support, SME rejuvenation and social safety net programmes,” the Mier said in a statement.
The fall in household income is due in part to the 11% decline in consumer spending despite the fact that the prices of goods are dropping by about 4.4%.
Malaysia’s 2020 gross domestic product (GDP), a measurement of its economic output, will likely be -2.9%, a drop of 6.9% from earlier projections.
Negative GDP measurements indicate a recession.
These projections are based on the overall impact of the shutdown in most economic activity as a result of the MCO which lasts until March 31, and the possibility that it may be extended for another two weeks.
The MCO was started on March 18 to break the chain of Covid-19 infections in Malaysia by reducing face-to-face contact between individuals.
In its study, Mier argued that an extension would likely be necessary to deal with a peak in infections by the middle of April.
“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.
“Ensuring full compliance of the MCO will be most paramount at this stage. This will prevent further ripples in the economy, where any additional MCO of two weeks may amplify the contraction of real GDP between 3% and 4 % relative to the 2020 baseline.” – March 25, 2020.