KUALA LUMPUR: The Malaysian Institute of Economic Research (MIER) is calling for an additional RM75bil spending by the government to counter the projected economic disruption arising from the Covid-19 pandemic.
This is on top of the RM20bil stimulus package announced by the government on Feb 27.
The economic research outfit, in a report today, also predicted that Malaysia will enter into a recession this year.
"To mitigate the economic effects, we propose that the government set aside an extraordinary crisis budget comparable to the projected income losses of RM95 billion," MIER said.
"Such 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 programs," it added.
The report was published following a second study by MIER on the economic impact of the Covid-19 pandemic.
MIER had earlier in February predicted that the economy will expand at a slower pace in 2020 after the disease was first detected in Malaysia.
With the movement control order (MCO) in place to control the global pandemic, MIER predicted a more severe impact on the economy.
It has assumed that the MCO, which was supposed to end on March 31, to be extended by another two weeks.
MIER's latest findings show that:
- 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.
- The number of job losses (presumably mainly non-salaried jobs) could be in the region of 2.4 million, 67% of which are unskilled workers.
- Household incomes is projected to fall by 12% relative to the baseline, which amounts to RM95 billion.
- Such a fall is manifested in a sharp decline in consumer spending by 11%, despite the drop in general consumer price level by 4.4%.
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