STRINGENT containment measures within the Klang Valley – notably in the form of a total lockdown – could cause a dent on the economy especially if it is a total lockdown that stretches beyond a two-week period.
In the view of PublicInvest Research, a lack of more significant intervention to lower the COVID-19 curve in the Klang Valley could prove to be a medium-term drag on economic recovery, thus putting further strain on the Government’s already stretched fiscal condition.
The research house estimates a total lockdown period of two weeks, four weeks, six weeks and eight weeks to impact Malaysia’s gross domestic product (GDP) by -0.8%, -1.4%, -2.2% and -2.9% respectively.
“The Klang Valley is the economic engine of the country given their largest economic contribution (40%),” justified economist Dr Rosnani Rasul in an economic update.
“The significance of the area to the economy is further cemented by the fact that it is home to about 43% of the country’s population (Kuala Lumpur & Selangor combined: above 13 million).”
Moreover, Kuala Lumpur is also the most densely populated area in Malaysia (6,891 persons per sq km) followed by Putrajaya (ranked third with 1,478 persons per sq km) with Selangor at fifth place (674 persons per sq km) which further increases the risk of transmission.
“Though monitoring and enforcement may increase, effectiveness may be blunted by these areas’ big population, as well as large and high-density areas,” noted PublicInvest Research.
According to the research house, the likelihood of the imposition of more stringent movement restriction may be inevitable given the Klang Valley’s elevated level of infectivity rate (R-naught) which has been consistently above 1.0 since March and could be rising further given the detection of highly infectious variants in the community (ie the South African, the UK, the Indian and the Nigerian variants).
“With the number of new COVID-19 cases not showing any signs of abating and in fact exceeding the 6,000 daily case mark for two days in a row, this may call for more drastic measures to flatten the COVID-19 curve, particularly in the Klang Valley,” added the research house.
Prime Minister Tan Sri Muhyiddin Yassin is expected to chair the COVID-19 National Security Council (NSC) is in Putrajaya today to ascertain the need to impose a total lockdown nationwide as the ultimate measure to contain the spike in COVID-19 cases which is nearing the 7,000-mark. – May 21, 2021
