SWIFT measures by the government to revive the economy has earned the thumbs up from economists.
MIDF Research economist Mazlina Abdul Rahman said the Prihatin, Prihatin PKS+, Penjana and KitaPrihatin stimulus packages rolled out last year were timely to ensure the economy received continuous support to recover from the distress due to Covid-19.
“Some of the measures such as wage subsidies helped companies retain their employees for a longer time if not permanently, ” she said.
“Rakyat-centric measures such as cash handouts which are pro-consumption have cushioned the adverse impact to private consumption.
“The underlying economy has been in recovery mode since then, even though there were some hiccups due to resurgence of Covid-19 cases.”
She said the government’s focus this year on creating jobs were relevant as the labour market condition remained largely suppressed with the latest unemployment rate standing at 4.8%, way above the 3% level seen before the pandemic.
She also noted that issues in the labour market such as high youth unemployment rate and dominance of low-skilled vacancies had existed pre-pandemic and the pandemic could be seen as an opportunity to revamp the whole system and to tackle those issues.
“Stability in the labour market is crucial as it influences spending or consumption, which is the biggest contributor to our GDP, ” Mazlina said.
Sunway University Business School economics professor Dr Yeah Kim Leng said the economic contraction in 2020 would have been worse than the Asian financial crisis if not for the stimulus packages.
“The challenge for the government now is to rebuild its fiscal position, given that we have experienced a series of very hard knocks from the global financial crisis to 1MDB and the pandemic, ” Prof Yeah said.
“An important forward-looking measure is the speed in which the Malaysian economy can recover faster than other countries and more importantly, to place itself in a position to rebuild its resilience in the global landscape.
“The focus on facing future global crises will include things like climate change, environmental crisis and other public health crises, ” he said, adding that the pandemic had also revealed crucial vulnerabilities in the Malaysian economy such as heavy dependence on unskilled foreign workers, low wages and a sizeable number of low income households.
He stressed on the importance of creating a conducive and dynamic business environment that could accelerate business expansions and continuous upgrading to raise productivity levels and to generate more high-skilled and high-wage jobs, which is vital to sustain the nation’s economic growth.
Alliance Bank chief economist Manokaran Mottain said measures taken by the government had averted downside risks to the economy.
He particularly liked the Penjana stimulus package that involved training the unemployed and retraining the retrenched.
“It is not for now, but for the future. They will definitely benefit from those training in this fast-changing global landscape.
“The Finance Minister was a banker, so he has got the experience to tackle the downside risks, ” he said.