WHILE the Perikatan Nasional government has painted an optimistic outlook of the nation’s economic recovery, which in itself is encouraging, the stakeholders seem to think otherwise.
The Federation Of Malaysian Manufacturers (FMM) has projected recovery from between four months and two years depending on the sectors while the Malaysian Employers Federation (MEF) has estimated that up to two million jobs would be lost as a result of the prevailing economic turbulence caused by the Covid-19 pandemic.
According to a FMM-MIER Business Condition Survey, almost 50% of respondents are said to have indicated that they would be reducing their workforce by 30% by the end of the year, notwithstanding the possibility of it spilling over to 2021.
Whether we are inclined to believe it or not, the reality is that our country is not out of the woods! And the bare facts seem to indicate as such. The recent Bank Negara Malaysia report stated that the country’s gross domestic product (GDP) has contracted by 17.1%. It has also been reported that unemployment in June 2020 was estimated at 4.9%, translating to 773,200 jobs lost.
The Department of Statistics estimates that private sector job losses were about 200,000, a decrease from 8.6% to 8.4% in the second quarter.
As affirmed by none other than the Human Resources Minister himself, unemployment figures could be even higher on account of employers not reporting retrenchments even though they have a statutory obligation to do so.
The actual unemployment figures would be further compounded if job losses in the informal sector were included.
According to a survey by the Department of Statistics (April 2020), 47% of the self-employed lost their livelihood and 35.5% reported a 90% decline in income. On an actual scale, it was reported that about 2.86 million self-employed lost their only source of sustenance. And they are from the most marginalised segments of society, namely hawkers, fishermen, farmers and etc.
It is projected by Bank Negara that our economy would see a V-shape recovery in 2021. We hope and pray for this to happen.
On this score, I wish to quote Amir Jalal, research associate with EMIR Research, who noted in April: “However, in reality the economy will experience a W-shape recovery, in which after the MCO is over, the economy will turn around for a while, but will fall again due to debt burdens that are overdue, then followed by a rise after the economy is able to run normally.”
Whether it is V- or W-shape, the nature of our economic recovery ought to be of utmost concern not only to the government but all stakeholders as well.
Should the government be overly optimistic of a quick recovery, given the recurring challenges of the Covid-19 pandemic, this ought to be deliberated with utmost transparency.Our economic development policy has been centred on commodities (petroleum, palm oil, rubber, timber and etc), dependency on largely export-oriented manufacturing, and tourism and the service sectors.
Heading into the uncertainties of the Covid-19 pandemic, the escalating US-China trade upheaval and the supply chain distortion, one ought to ponder whether our government ought to elect to be cautious in its economic projections.
Regardless of whether the country is on a V- or W-shape curve, it is imperative that the government continues to roll out stimulus packages to ensure that the most deserving segments of society, especially the B40 and M40 groups, are shielded from the adverse impacts of the prevailing economic conditions.
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