Important. Unemployment rate determines the economic outlook of a country. When more people lose their jobs, we would soon see many more people stop paying for their loans. When more people stop paying for their loans, then we would see even more financially distressed people and there would be some desperate selling of their assets. Bankruptcies may increase and well, the issue will continue. Non-Performing Loan (NPL) will also rise.
Why breathing space is so important
However, if we could give all these distressed people a breathing space to look for the next job, open back their businesses after the lockdown, then things may be totally changed. The loan moratorium gives these people and many businesses some time to get the next job and to strategize on their business and they could continue their loan repayments. All stakeholders could now heave a sigh of relief.
Unemployment in Malaysia?
How’s the unemployment in Malaysia then? An image from Department of Statistics Malaysia (DOSM). It has shown that the number was generally hovering around 3.3% at the end of 2019 before it suddenly shot up in March 2020 when our Movement Control Order 1.0 (MCO 1.0) started. With the lockdown, businesses could not open and this meant that the unemployment numbers rose even further and peaked at above 5% in May 2020. This continued to stabilise and started a downtrend until September 2020.
What has happened after that, despite the MCO 2.0 starting in October is that the unemployment numbers started to climb again but the number seemed to have stabilised if we compare this to periods after MCO 1.0. Nevertheless, it has to be noted that the unemployment rate is still close to 5%.
Hopefully what happens next is that more businesses would start to reopen fully and the new norm starts to go back to old norm; people start to buy, buy and buy again. Not specifically on property yeah, everything which people wanted to buy but did not get to buy earlier. Even the holidays which was supposed to be overseas, perhaps can now do it locally. Let’s see when the travelling between states would be allowed though I do hope that we only allow once we have just a few hundred active cases in whole Malaysia and we have had this situation for over 14 days. Happy following.
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