PETALING JAYA: Although the worst may be over, structural issues in the economy resulting from the lockdown may delay or impede recovery, experts say.
The experts raised doubts over finance minister Tengku Zafrul Aziz’s statement that the national Covid-19 immunisation programme, coupled with the economic recovery plan, would bring Malaysia’s growth back on track.
Speaking to FMT, Geoffrey Williams of Malaysia University of Science and Technology said Tengku Zafrul was correct in that the worst was over and that the economy was likely to recover later in the year.
However, he noted that the economic recovery’s reliance on the government’s stimulus injections might prove troubling down the line.
“This is the crux of the issue, because after these run out by mid-year, there may be fewer options if further stimulus is needed,” he said.
“The lockdowns have also caused structural changes to the economy which have not, so far, been addressed.”
Williams said the structural problems might have far-reaching consequences that may cripple the recovery even after the pandemic was over.
“Just to name a few … millions without their pensions, structural unemployment and underemployment, rising private sector debt and non-performing loans,” he said. In addition, the nation would have to contend with high government debt.
He said although the issue of loans and private sector debt might be manageable, the government should watch out for social issues resulting from poverty and debt.
He did not foresee any more policy intervention to hasten economic recovery while the nation sits on the vaccination waiting list.
“The only way to quicken economic recovery is to allow activity to fully recover by lifting movement restrictions. When you pump in extra demand, you risk inflation if you don’t relieve suppliers from constraints,” he said.
Barjoyai Bardai of Universiti Tunku Abdul Razak told FMT that predictions for 2021 indicate that the economy might “prosper yet”.However, he noted that several strategies were needed to keep structural problems from impeding recovery.
He said although the short-term priority was to make sure there was enough money in circulation to boost employment and consumption, the government should look into overhauling the economy itself.
“At this stage, the economy is still too dependent on capital and foreign investments. It has worked well, but has drastically skewed the wealth distribution in Malaysia,” he said.
In addition, it had left both Malaysia’s economic recovery and economic growth at the mercy of investors.
“Ultimately, the country needs to be ready to brave the Fifth Industrial Revolution. But it won’t be ready until it has fully adapted to the demands of the Fourth Industrial Revolution itself.
“For this, the masses of low skilled manpower need some serious re-skilling, up-skilling and re-positioning to improve their productivity.
“The Human Resources Development Fund (HRDF) must mobilise its resources to upgrade Malaysia’s workforce over the next six to nine months,” Barjoyai said.
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