AS expected, the Government has initiated action to cushion the blow to the Malaysian economy following the imposition of a total lockdown which comes into effect today (till June 14 but may extend beyond that date) by doling out the PEMERKASA+ assistance package valued at RM40 bil.
With the seventh package to be rolled out to-date by the Perikatan Nasional Government, the total cumulative economic stimulus is now valued at RM380 bil – an equivalent to 24.2% of Malaysia’s gross domestic product (GDP). All-in-all, the exercises involved a total fiscal injection of RM86 bil.
In a gist, the PEMERKASA+ package comprises of 12 initiatives carried out across three main objectives, namely (i) enhancing public health capacity; (ii) continuation of the people’s welfare agenda; and (iii) supporting the business continuity.
While applauding the measures, TA Securities Research commented that it found nothing new in the latest package given most of them had been announced previously.
“We opine it is matter of increasing the allocation amount or extending the current measures/aid from past packages to a certain period of time,” opined economists Shazma Juliana Abu Bakar and Farid Burhanuddin in an economic update.
“Though it is still early to calculate, we estimate that the 14 days full lockdown would cost about RM1.5 bil a day or approximately RM21 bil during the period.”
For comparison, Malaysia lost about RM2.4 bil per day during the maiden movement control order (MCO 1.0 from March 18 to May 3, 2020) and about RM300 mil to RM400 mil daily during MCO 2.0 (from Jan 13 to Feb 18 this year).
The Finance Ministry (MOF) has recently estimated a 1% impact on the GDP throughout the implementation period of MCO 3.0 from May 12 to June 7.
“We project the extra RM5 bil direct injection from this PEMERKASA+ package would increase our fiscal deficit by 0.3%-point, ceteris paribus, bringing it to -6.3% of GDP for this year,” projected TA Securities Research.
Meanwhile, Kenanga Research expects Bank Negara Malaysia (BNM) to maintain a status quo on its monetary policy front due to the global economic recovery narrative even as the central bank has some room to manoeuvre with the likelihood of another rate cut in view of the imposition of a full-scale lockdown.
“Various measures introduced by the government and the expectation of faster domestic vaccination rates are expected to boost the economy growth in the 2H 2021,” projected economist Wan Suhaimie Wan Mohd Saidie.
“This is also backed by the current inflationary environment amid rising global commodity prices as well as stronger external demand as evidenced by a sharp acceleration in the export growth (April: 63.0% year-on-year; March: 31.0%).” – June 1, 2021
