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June 8, 2021

Covid-19 Case Surge ‘Disrupts’ the National Economy

 Malaysia's economic recovery is expected to be affected by the recent increase in cases of Covid-19 infection which led to the implementation of a two-week full movement ban from June 1 to 14.

Moody’s Analytics in its research note yesterday said its fundamentals projected 5.6% expansion this year but there were additional risks of low growth and increased uncertainty.

“Full movement restrictions will have an impact on domestic demand, especially domestic consumption as only essential services are allowed to operate.

"The main concern is the extent to which manufacturing and exports will be affected as a result of the capacity constraints introduced," the firm said as reported by Bernama.

Production plants will only be allowed to operate at 60% capacity during the period, thus limiting production and exports until mid -June as Malaysia's exports grow rapidly following strong demand from the global consumer technology sector.

“Malaysia's daily infections have averaged between 7,000 to 8,000 since late last month. This is the second wave of infections in the country this year but the worst. The first wave hit last January with an average daily infection of just over 2,500 cases.

“The Malaysian economy during the Covid-19 pandemic last year performed better than many of its neighbors in Southeast Asia. Daily infections remained below the 1,000 case level during the first nine months of the year, ”said Moody’s Analytics.