KUALA LUMPUR, Nov 20 ― The country's economic recovery in the Covid-era is likely to be gradual in the shape of the letter “U” rather than bounce back sharply like the letter “V”, Senior Minister Datuk Seri Azmin Ali told Bloomberg TV in an interview.
He said the resurgence of Covid-19 cases nationwide have prompted public officials to revise their initial economic forecast for 2021.
Putrajaya had earlier predicted a V-shaped recovery, estimating the economy to pick up quickly by the first half of 2021 on optimism that the Covid-19 pandemic could be contained.
Azmin also told Bloomberg TV that the government is forced to reintroduce movement restrictions to lower the infection rate that had seen four digit cases daily.
He admitted that doing so could hurt businesses and slow growth.
“It looks like that is the situation now but the pace is still slow,” he said when asked about the country's recovery prospects.
“The best approach is to adopt MCO to contain the virus, but that will cost the economy,” Azmin said, referring to the movement control order.
The MCO that started in March and the subsequent phases of restrictions has battered Malaysia’s economy, forcing many businesses ― especially small and medium enterprises ― into government financial dependency for their survival.
The government estimated the lockdown to have cost a fourth of Malaysia’s GDP.
The national GDP contracted at a slower pace in the third quarter, rebounding from a record low first half after restrictions were eased back from May.
Government officials, buoyed by positive data then, suggested “firm support” for revival.
But a recent surge in cases could upend the outlook. New infections in the nation have hovered above 1,000 for five straight days through Tuesday before climbing to 1,290 yesterday.
Azmin said support for Budget 2021 is crucial to facilitate recovery.
“There’s no reason for the MPs to not support the budget and to defeat it when the budget is meant for the people and economic activities in Malaysia.
“The finance minister has taken all views into consideration,” the international trade and industry minister said.
Prime Minister Tan Sri Muhyiddin Yassin is facing his toughest political test since taking office in March when parliamentarians vote on his maiden Budget next week.
Backbenchers and Opposition MPs have indicated that they may not support the Budget, which is being seen as a yardstick of support for Muhyiddin as PM.
Should it fail to be passed, a general election might be called.
Azmin told Bloomberg TV said the ruling Perikatan Nasional coalition is prepared for that possibility and confident of victory.
“With our track record for the last eight months, we will secure a bigger majority in the next general election,” he said.