Page 9 - Malaysia Marine & Offshore Industries Directory 2020/2021
P. 9

                 BRACING FOR RECESSION
MALAYSIA MARINE & OFFSHORE INDUSTRIES DIRECTORY 2020/2021 EDITORIAL
  In April 2020, the Malaysian government reported that throughout the lockdown period that was implemented to nip the spread of COVID-19 in the bud, the economy was losing approximately RM2.4 billion a day. There have been four phases of the Movement Control Order (MCO): March 18-31, April 1-14, April 15-28, and April 29-May 12. This adds up to almost two months, with an estimated total loss of RM63 billion as of May 1.
To arrest the loss of revenue, while taking into consideration the improvement in the number of COVID-19 cases in the country, the government made the decision to partially reopen the economy on May 4, 2020, with a Conditional MCO (CMCO) implemented until June 9. This eased into the Recovery MCO (RMCO) phase until August 31 with more freedom of movement and almost all sectors being opened.
As the economy gets moving again, the effects of the pandemic and the MCO are slowly being felt around the country. With businesses having to tighten their belts to stay afloat or shutting down altogether and jobs being lost – some estimates say more than two million Malaysians can end up unemployed – economists expect the country to face a rough recession in 2020.
Some analysts say the recession is already here. Others, however, believe that it is not quite here yet but will arrive soon. By definition, a recession is a period of negative growth over two consecutive quarters, i.e. six months. One can argue, therefore, that it is just a matter of time.
While some paint a doom-and-gloom picture of the worst recession in history with a very long recovery period ahead of us, others take a more optimistic perspective that recovery will be faster than expected because they view the recession as an artificial event that is the result of a forced shutdown of the economy. Backed by macro policies and fiscal stimulus, they believe the economy will pick up speed in the second half of 2020 (2H20) and return to business as usual by 2021.
Perhaps the first quarter GDP numbers released for 2020 (1Q20) are a harbinger of things to come. The economy recorded a growth of 0.7%. Granted, it is a huge drop from the 4.5% growth in the same quarter in 2019 (1Q19). It is a big drop even when compared to 2019’s already poor fourth quarter (4Q19) performance of 3.6%, which until 1Q20 was the lowest since a decade ago in 3Q09. A slump in tourism, a drop in demand for palm oil, crude oil and natural gas, and weak economic activity due to the MCO have all served as a wrecking ball
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