by AZREEN HANI
MALAYSIAN Rating Corporation (MARC) expects the government to lift interstate travel ban soon to prevent further economic scarring.
“We believe that the government will soon lift the ban on interstate travel soon.
“As the virus has already infiltrated the community, we think a stronger enforcement of SOPs rather than the imposition of harsh mobility restrictions is a more appropriate policy response. This is because it will minimise further economic scarring,” the rating firm said in a statement yesterday.
Prior to this Prime Minister Tan Sri Muhyiddin Yassin had said that the government will no longer implement a blanket lockdown.
Rather, more localised movement control order (MCO) will be enforced at the Covid-19 infected areas, he said.
“We laud the Malaysian government’s commitment to steer clear from deploying a blanket MCO to combat the pandemic,” MARC said.
Muhyiddin also recently said that those who have received the two doses of vaccine will be allowed to interstate travel, although Senior Minister Datuk Seri Ismail Sabri Yaakob the matter is still pending discussion.
Meanwhile on the Malaysian GDP forecast, MARC estimated 5.6% growth, lower than Bank Negara Malaysia’s 6% to 7.5% figures.
“Contrasting with BNM’s optimistic GDP forecast, MARC’s forecast comes in lower at 5.6%. We believe that the current rebound will not take GDP back to pre- Covid- 19 levels by mid-2021,” it said.
“After all, the economic damage remains, and the recovery has not been broad- based. It is telling that the majority of businesses in a recent survey by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) indicated that they cannot sustain beyond six months due to cash flow problems.”
In the absence of full economic resumption, MARC also said that any potential upsides to the central bank’s forecast due to the so-called pent-up demand will be muted.
The firm added that the strength of the recovery remains heavily dependent on the persistence of the economic scarring.
“Also important is the effectiveness of policy responses and the ability of businesses to adapt. For example, while the pandemic may have spurred increased digitalisation and innovation, some businesses may not have the resources to adapt to the new normal,” it said.
“In any case, it is likely that the scarring to high-contact service sectors, which have borne the brunt of the pandemic, will be slower to heal.”
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