Malaysia’s annual growth to suffer from MCO 2.0: Moody’s

KUALA LUMPUR – The second movement control order (MCO 2.0) in key states with bustling economic activities will hit Malaysia’s economic growth this year, said financial intelligence company Moody’s Analytics. 

Its chief Asia Pacific economist Dr Steve Cochrane said the MCO 2.0, which is currently being implemented in Selangor, Kuala Lumpur, Penang, and Johor – which cumulatively accounted for 60% of Malaysia’s economy. 

The Klang Valley alone holds 40% of Malaysia’s economic activities, he noted, and stressed that Malaysia is not in a recession but the strict policies did create some risks of slowing the economy.

“There are a few countries that I worry about the most...(one of them is Malaysia) which we have classified as at risk. Malaysia is having trouble controlling Covid-19 (transmissions) after initially doing a pretty good job. 

“The Philippines and Indonesia are two other countries that are having trouble managing Covid-19,” he said during a webinar on the outlook for the global economy with a spotlight on the Asia Pacific recovery today.

Cochrane said the Philippines and Indonesia were having a hard time controlling Covid-19 as both countries had not been firm in instituting physical distancing measures. 

“The Philippines was very strict for a long time, suffered so much from that but they have stopped some of the (physical) distancing measures there, while Indonesia has never really instituted a very strict (physical) distancing (regime),” he added. 

Meanwhile, China, Vietnam, Taiwan, and New Zealand are currently seeing economic expansion, mainly due to the effective management of the Covid-19 pandemic.

“There is three really important factors that helped the differences across the Asia Pacific region; one is how well each country has managed Covid-19 pandemic, second is how closely the countries are tied into the world trade patterns as well as supply chain, and third is the fiscal response, which has been very important across the entire region,” said Cochrane.    

Overall, he said Asia Pacific is the strongest region globally and it leads the way in economic recovery out of the pandemic. – Bernama, February 24, 2021