The outbreak of the Covid-19 coronavirus sent shockwaves around the world as nations hastily assembled together stimulus packages in the wake of this unforeseen event. The Institute of Strategic Analysis and Policy Research (INSAP) are greatly concerned about this and are monitoring the situation closely. In this regard, I have penned considerations for the upcoming stimulus package to be announced soon, which Dr Ahmed Razman Abdul Latiff of Putra Business School expects could total up to RM15bil.
The stimulus should be prudent and its scope limited to affected industries, taking precaution not to spend excessively. An overpowering stimulus package has the potential to reduce long-run productivity as public spending crowds out private investment, whereas spending too quickly may cause the stimulus to prematurely run out of steam. Therefore, a boost to infrastructure spending on roads and railways by way of a traditional stimulus package may not necessarily achieve its intended results.
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