Malaysia’s economy to take a deep hit from emergency declaration

The declaration of a state of emergency in Malaysia until August 1, 2021 to curb the spread of Covid-19 is not going to bode well for the country’s economy, analysts said.

While the emergency decree allows Malaysia’s government to enact immediate laws to support a recovery, it could dent consumer confidence and scare off investors, CIMB said in a comment.

After the official announcement on January 11, Malaysia’s stocks and currency fell on the following day, while the country’s benchmark stock index KLCI lost 1.5 per cent.

In a televised address after the release of the statement, Malaysia’s Prime Minister Muhyiddin Yassin said there would not be a curfew and the civilian government and judiciary system would continue to function. But parliament would be suspended and elections could not be held during the period, he added.

He also said that Malaysia would remain “open for business” and the emergency period will give the country “much needed calm and stability.” The state of emergency could even end earlier than August 1 if the number of daily cases gets under control and is effectively lowered, he added.

Ordinances against “economic sabotage and price hiles”

The emergency state would be necessary to allow for ordinances to fight “economic sabotage, monopoly and excessive price hikes” amid the pandemic, Yassin added.

The measures come as record numbers of Covid-19 infections stretch Malaysia’s health system to the breaking point, while businesses have lost hope for a quicker recovery.

The state of emergency coincides with a two-week lockdown starting on January 13 that led analysts to shave as much as 1.5 percentage points off their forecasts for the country’s annual economic growth this year. The new restrictions will mean a loss of about three billion ringgit ($742 million) per week in private consumption, according to an RHB Bank estimate.

Malaysia’s economy was hardest affected by the Covid-19 pandemic in the second quarter of 2020 and began bouncing back in the latter half of the year. Now, expectations have to be lowered again which again sends negative signals to foreign and domestic investors and will highly likely lead to the outflow or diversion of foreign investment from the country.



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The declaration of a state of emergency in Malaysia until August 1, 2021 to curb the spread of Covid-19 is not going to bode well for the country’s economy, analysts said. While the emergency decree allows Malaysia’s government to enact immediate laws to support a recovery, it could dent consumer confidence and scare off investors, CIMB said in a comment. After the official announcement on January 11, Malaysia’s stocks and currency fell on the following day, while the country’s benchmark stock index KLCI lost 1.5 per cent. In a televised address after the release of the statement, Malaysia’s Prime Minister...

The declaration of a state of emergency in Malaysia until August 1, 2021 to curb the spread of Covid-19 is not going to bode well for the country’s economy, analysts said.

While the emergency decree allows Malaysia’s government to enact immediate laws to support a recovery, it could dent consumer confidence and scare off investors, CIMB said in a comment.

After the official announcement on January 11, Malaysia’s stocks and currency fell on the following day, while the country’s benchmark stock index KLCI lost 1.5 per cent.

In a televised address after the release of the statement, Malaysia’s Prime Minister Muhyiddin Yassin said there would not be a curfew and the civilian government and judiciary system would continue to function. But parliament would be suspended and elections could not be held during the period, he added.

He also said that Malaysia would remain “open for business” and the emergency period will give the country “much needed calm and stability.” The state of emergency could even end earlier than August 1 if the number of daily cases gets under control and is effectively lowered, he added.

Ordinances against “economic sabotage and price hiles”

The emergency state would be necessary to allow for ordinances to fight “economic sabotage, monopoly and excessive price hikes” amid the pandemic, Yassin added.

The measures come as record numbers of Covid-19 infections stretch Malaysia’s health system to the breaking point, while businesses have lost hope for a quicker recovery.

The state of emergency coincides with a two-week lockdown starting on January 13 that led analysts to shave as much as 1.5 percentage points off their forecasts for the country’s annual economic growth this year. The new restrictions will mean a loss of about three billion ringgit ($742 million) per week in private consumption, according to an RHB Bank estimate.

Malaysia’s economy was hardest affected by the Covid-19 pandemic in the second quarter of 2020 and began bouncing back in the latter half of the year. Now, expectations have to be lowered again which again sends negative signals to foreign and domestic investors and will highly likely lead to the outflow or diversion of foreign investment from the country.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

$
Personal Info

Donation Total: $10.00

 

 

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