Malaysia has worst economic decline since 1998. Our economic growth in the negative territory for 2020. In 1998, our economy dropped 7.5%. It was due to the 1997 ASEAN financial crisis. It was also the time when I tried my very best not to spend much money when I was at the supermarket in Bristol (I was studying for my degree then) because the ringgit depreciated until it was close to RM8 to 1 Pound at the beginning of 1998. Today, it’s around RM5.70 to 1 Pound. Anyway, speaking about economic growth which was obviously in the red territory for 2020.
Article in the sundaily.my Sunway University economics professor Dr Yeah Kim Leng noted that the Malaysian economy contracted by 5.6% last year, its second steepest decline after the 7.5% drop due to the 1998 recession. He said, “The current nationwide lockdown will dampen economic recovery and increase uncertainties over its growth trajectory, which will likely be lowered by one to two percentage points from the earlier 6% to 7.5% expected by the government.”
With regards to the full lockdown of all except essential sectors, he shared, “Workplace clusters have impacted production but not as extensively as the current shutdown of industries deemed non-essential. This will constrain the supply side of the economy and restrict demand activities.”
He also shared something which is of utmost importance to Malaysia. He said, “Of critical importance is the containment of the pandemic through speedy mass vaccinations, testing, contact tracing and quarantine measures so that the economy can be reopened as much as possible.” Please do read the full article here: Article in the sundaily.my
Worst in 2020, more important now is what happens in 2021
Actually, the economic growth is unlikely to hit our earlier projected numbers. We are still in a lockdown even as we speak. This meant that most businesses would not be able to provide sufficient supply and cater to demands since even those who could demand for those services would all be home all the time.
Demand will be much lower
It is possible to order online for food delivery but this is by far lower than if we could have dine-ins with friends and in groups . Corporate events have all stopped. Team celebration dinners have all stopped. Sudden mamak session with good friends have also all stopped. Last but not least, family dinners for birthday celebration have also stopped. This is why businesses are hard hit and many may not be able to survive past the lockdown.
What could we do?
If we have not gotten vaccinated, please register and just do it. Please tell our friends who continue to think of vaccination as scary to go and register and just get vaccinated. I am not an economist but I know that countries which have hit 50% vaccinations of at least one dose have all started to do much better in economy than all the countries where lockdown remains staple because vaccinations remain low. Let’s look forward to a better 2H 2021 and possibly a very positive 4Q 2021 too. Thank you all.
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