Next 3 to 6 months crucial for economic recovery, says Tengku Zafrul

Finance Minister Tengku Zafrul Aziz says Malaysia’s move to lower the overnight policy rate is driven by global economic conditions.

KUALA LUMPUR: The coming three to six months will be crucial for the successful implementation of the National Economic Recovery Plan (Penjana), which is expected to show results by the third or fourth quarter of 2020, the finance minister said.

Tengku Zafrul Aziz said Malaysia’s move to cut the overnight policy rate (OPR) today to a record low of 1.75% from 2% previously was driven by global economic conditions, which were still in the early stages of recovery from Covid-19.

He said that based on forecasts by various agencies such as the World Bank and International Monetary Fund, more than 150 of the 195 countries globally were expected to record economic contraction in 2020.

“The decision to reduce the OPR is aimed at accelerating the rate of recovery and further stimulate the country’s economy.

“The government believes that this move, combined with proactive measures deployed since March under the Prihatin and Prihatin SME+ economic stimulus packages and, more recently the National Economic Recovery Plan (Penjana), will be able to regenerate the economy by creating jobs, restoring consumer and investor confidence, as well as containing the likelihood of a sharp economic contraction,” he said in a statement.

Tengku Zafrul stressed that Malaysia’s economic recovery was also subject to the collective effort of all parties, including corporates, small and medium enterprises, businesses and consumers.

He said the stimulus packages totalling RM295 billion had benefited about 800,000 businesses and saved an estimated 2.6 million jobs.

Tengku Zafrul said Malaysia had demonstrated its resilience in managing various challenges, including the Asian financial crisis and the global financial crisis, due to its sound economic fundamentals and robust institutional framework, as well as well-regulated financial and capital markets.

Earlier, Bank Negara Malaysia said the cut in OPR would provide additional policy stimulus to accelerate the pace of economic recovery in the wake of the Covid-19 crisis.

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