According to World bank, Malaysia’s gross domestic product (GDP) is projected to contract by 0.1 per cent to 4.6 per cent this year amid negative impact brought by Covid-19.

Smita Kuriakose, senior economist, finance, competitiveness, and innovation global practice, said the impact on Malaysia’s economy was likely to be large looking due to Covid-19’s adverse impact on foreign direct investment (FDI), commodities and tourism as well as domestic shocks due to the movement control order (MCO). Malaysia is also among the economies highest connected to global supply chains.

Since the coronavirus outbreak started up to March 23, there was the largest outflow from the emerging markets ever recorded at US$83 billion (RM357.7 billion), while global direct foreign investment was likely to drop by 30 to 40 per cent this year, she said.Meanwhile, 75 million jobs are at risk in the travel and tourism sector, with two-thirds being in Asia.

“We must acknowledge the fact that recovery would not be uniform across sectors and even regions,” she said during a web-based seminar hosted by not-for-profit think-tank Research For Social Advancement (REFSA) titled “Flattening the Recession Curve: Saving SMEs and Preserving Jobs”.

She said ample initiatives need to be launched to helping the Small and Medium Enterprises (SMEs) amid the disruption in supply chain and demand. According to Smita, local SMEs particularly still lag behind in utilising the digital platform and this needs to be addressed.

While the government had shown its commitment to react quickly and allocated substantial resources to respond to the outbreak, recovery was likely to take years, she said.

Bank Negara Malaysia (BNM) announced its latest GDP growth projection for 2020 last week, estimating a range of -2 per cent to 0.5 per cent. This is down from 2019’s 4.3 per cent growth.

Shamsiah Yunus, BNM governor Datuk Nor said “Once people’s confidence is restored, economic activity will rebound. And you will have all the pent-up demand and that will also drive recovery eventually,”.

The central bank said the domestic growth was expected to improve towards year-end and subsequently in 2021 as risks from the pandemic subsided, in line with the projected recovery in the global economy.