KUALA LUMPUR – The development of several Covid-19 vaccines is being fast-tracked, but they will have a significant impact on the Malaysian economy only after being widely deployed, said an economist.
United Overseas Bank senior vice-president Julia Goh told the Universiti Malaya Post-Budget Analysis webinar on Friday that the economic recovery in the third quarter is still considered soft.
“In the global context, not just Malaysia, infections are not going down. Global cases are going up despite lockdowns. There’s the third wave, and Hong Kong said it is going through a fourth wave. There are hotspots across the region.
“Even with vaccines being available next year, central banks remain cautious. I guess they know the reality – what about the masses? Can you vaccinate the masses? Only after you vaccinate the masses will you see a significant difference in the economy.
“In the meantime, the economy is still susceptible to (Covid-19) resurgences along the way, which will lead to mini lockdowns. Although we see the economy recovering in the third quarter, the truth is, it is soft. Resurgence will soften until we go back to pre-pandemic levels.”
Until mass deployment is done, she said, physical distancing must be observed and travel will not return to normal.
She said based on the K-shaped recovery, certain countries and economic sectors actually benefit from the virus crisis, while others will require more targeted government assistance.
Countries such as the US, China, Taiwan, South Korea and Vietnam are on the recovery path, while those facing challenges are India, Indonesia, Thailand, Japan and the UK, her presentation showed.
Industries that thrive amid the pandemic are e-commerce, technology, gaming, applications and services, electronics, and pharmaceuticals, while those hardest hit are tourism-related ones, airlines and entertainment.
“What you see is that the self-employed and micro enterprises have fallen to the bottom part of the ‘K’. What is important as we move forward in the recovery period is, we cannot continue with broad-based support. We have to balance it out,” said Goh.
“There are sectors that will recover and do better. Even in 2021, there will still be sectors that need support, especially (those at) the bottom of the ‘K’.
“This dichotomy between the sectors will be one of the contributing reasons that Malaysia’s GDP will take some time before it can return to pre-pandemic (levels).
“The difference between this economic crisis compared to the 1997/98 Asian financial crisis and 2008 global financial crisis stems from the fact that there is a health crisis element mixed into the bag.
“That time (1997), we could export our way out of the crisis. You could see back then the massive support from the central bank. Bank Negara is still supporting, but because of the health crisis element, it will make it tougher and longer to recover.” – The Vibes, November 22, 2020
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