Budget 2021: Is Malaysia’s economy on the road to recovery?

MORE than anything else, today’s passing of Budget 2021 reflects a political victory for Prime Minister Tan Sri Muhyiddin Yassin in that he successfully fended fiery attempts by his rivals to displace him.

Regardless if it was a slim victory of 111-108 (with one MP being absent), Muhyiddin still garnered the majority support and shall rightfully continue to head the government.

But, how does that affect the nation’s economy? Are we looking at a brighter 2021 for 2020 has by far being a tormentous year for every Malaysian or citizen of the world for that matter?

“Now that the budget has been passed, let’s stop politicking and get down to the business of building our economy,” pleaded Sunway University Business School economist Prof Dr Yeah Kim Leng during his interview with FocusM.

Prof Yeah Kim Leng

“The key to recovery is to quickly implement measures to sustain economic recovery. This is important as the pandemic has had a negative impact on the final quarter of this year.

“Now that the supply side of the economy has somewhat stabalised and normalised, the demand side comprising consumption and investment need to be supported further for the economy to emerge from this year’s recession.”

Yeah projected the earliest possible exit from recession to be the first quarter of 2021 although the second quarter seems most likely.

“What’s important is the recovery of low-income households, disadvantaged groups as well as small, medium enterprises (SMEs), particularly in the retail and hospitality industries which have been directly impacted by the pandemic,” he pointed out.

The other important aspect of the budget is the resources allocated to roll out the national immunisation plan for COVID-19 so as to enable economic and social activities to normalise.

“We should expect the economy to pick up pace as public confidence in the efficacy of the vaccine builds up among Malaysians after the first six months of the roll-out,” projected Yeah.

“Then we should be able to see improved and better economic performance in the second half of 2021. Already the early roll-out of the vaccine is providing positive support for a rebound of the global economic recovery.

“Of course, we are not expecting a very strong recovery given unemployment rate and effects on hard hit sectors will continue to linger on.”

Although challenges remain, Yeah expressed confidence that US President-elect Joe Biden’s administration will be an upside to the global economy by reducing China trade tension between the US and China.

Lee Heng Guie

Echoing a similar sentiment with Yeah, the Socio-Economic Research Centre (SERC) executive director Lee Heng Guie is hopeful that with the passing of the historical budget, it is time to get projects, especially in the construction sector, moving once again.

“We are all hopeful for a sharp rebound, but it all depends on how effectively we implement the budget such as addressing the issue of legalising illegal workers in the construction line,” he told FocusM.

“Hopefully we see more inbound tourists arriving from countries with similar COVID-19 risks as ours. Opening up borders is an option to be explored.”

But above all else, the fragile political state of the country is one of the many lingering concerns that can have adverse economic and financial impact on the country.

“A lot is left to be seen this coming year,” added Lee. – Dec 15,2020

 

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