KUALA LUMPUR – While the two-week extension of the movement control order (MCO) is expected to dampen the country’s economic recovery, the economy should be able ride out its impact, said an economist.
Sunway University Business School economics Prof Yeah Kim Leng said this is provided that export-oriented factories are allowed to continue operations, citing increasing external demand.
With locally focused industries, like retail and hospitality, severely affected due to the MCO, exports can be the key driver to keep the economy afloat, he told The Vibes yesterday.
“Currently, our domestic engine is badly affected by the MCO. However, our export demand continues to provide a glimmer of hope, which will enable the country to manage the economic impact.
“As long as production in manufacturing factories can continue, the impact on our economy will be less severe. We should be able to withstand, even if the MCO is extended.
“Factories with high production demand, like electronics and gloves, are holding up our industrial output. They are the engine of our economy now. We have to ensure they continue to support the economy, especially in the second half of the year.”
He said it is vital that employers take the necessary measures to ensure there are no Covid-19 infections at these factories, so as to avoid closures, which will affect output.
He was commenting on Senior Minister Datuk Seri Ismail Sabri Yaakob’s announcement earlier in the day that the MCO, in place in all states except for Sarawak, will be extended by two weeks to February 18.
While the economy will survive, said Yeah, it will still be affected due to reduced consumer spending, given that the MCO will extend through Chinese New Year (CNY) next week, a period that typically sees an increase in spending.
To alleviate economic hardship, he suggested that the government increase and accelerate financial assistance to those badly affected.
KL Hawkers and Petty Traders’ Association president Datuk Yow Boon Choon said while businesses are expected to be impacted, the MCO extension is needed to ensure cases are reduced, which will allow businesses to resume normal operations.
With the CNY celebrations looming, he said, it would be deeply concerning if the government lifted the movement curbs, which could lead to a further spike in infections.
“I actually agree with the extension. Yes, the economy will be affected, but this is for everyone’s benefit, especially when we talk about public safety.
“Imagine if cases increase during the festive season; it would mean businesses will suffer for a longer period. But hopefully, this will be the final extension.” – The Vibes, February 3, 2021
