Kuala Lumpur, 3 June 2020- Affin Hwang Capital expects the upcoming Short-Term Economic Recovery Plan (ERP) to cushion the domestic economy from a sharp contraction.
It said the government had previously announced a RM266 billion Economic Stimulus Package (PRIHATIN) to provide short term relief of about three to six months of assistance to support the economy from the negative short-term impact of the Covid-19 crisis.
“However, the government guided that the ERP is needed to ensure growth in the domestic economy is sustainable over the short to medium term,” it said in a research note today.
According to the Department of Statistics (DOSM), Malaysia’s Leading Index (LI), which is used to anticipate the turning points in economic activity in the short term, declined sharply to 4.9% in March 2020.
It was its largest monthly fall since November 1991, as compared to a contraction of 0.8% in February 2020, said Affin Hwang Capital.
The DOSM also predicted that the country is heading into an economic recession in the next four to six months.
Therefore, it said the ERP is also expected to include some short-term stimulus to support the domestic economy.
Yesterday, the Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz revealed that the Prime Minister Tan Sri Muhyiddin Yassin would unveil details of the ERP this month with further measures to support domestic economic activities for the period of June to December 2020.
The ERP is expected to focus on three main objectives — empower people, propel businesses and stimulate the economy, which are intended to capitalise on the opportunities arising from the Covid-19 crisis for the country’s future economic development.