Julia Goh, Senior Economist at UOB Group, and Loke Siew Ting, Economist at UOB Group, discuss the Malaysian government’s latest declaration.
“Malaysia’s government announced further aid under the PEMULIH package totaling MYR150 billion while the nationwide lockdown is prolonged. This raises the total amount of assistance announced since 2020 to MYR530 billion, spread out over eight fiscal packages (including MYR40bn announced in late May). PEMULIH has provided a direct fiscal injection of MYR10 billion, which will be used to fund monetary assistance, salary subsidies, grants, healthcare, and vaccinations.”
“PEMULIH focuses on three areas: 1) support for people’s welfare, 2) assistance to enterprises, and 3) vaccine acceleration.”
“With measures in place from July to December, which coincides with the four phases of the National Recovery Plan (the country’s pandemic exit strategy) for the next six months, the significant amount of spending will serve to soften the consequences of the ongoing lockdown. However, given the fluid situation and pandemic uncertainties, downside risks are more likely, particularly if vaccination rollout is delayed and new COVID-19 mutations constitute a threat. For 2021, we retain our full-year GDP forecast of 4.0 percent. We expect Bank Negara Malaysia to maintain its policy rate of 1.75 percent as a result of the additional support “”July 8th.”
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