IT is too early to say the economy will rebound next year, said former finance minister Daim Zainuddin, as the Covid-19 pandemic has tirggered an unprecedented global crisis.

He questioned the soundness of Finance Minister Tengku Zafrul Abdul Aziz’s prediction that the Malaysian economy could start to recover in 2021.

“It is very premature to claim that we will get out of the woods soon. The contraction of the economy will push back our progress by at least a couple of years,” Daim said in a recent interview.

“We must remember that while GDP (gross domestic product) recovered in 1999 after the (financial crisis) in 1998, it was not until 2002 that the economy went back to the same level prior to the crisis.”

Daim said the Malaysian Trades Union Congress (MTUC) has disputed the Finance Ministry’s (MoF) claim that 70% of workers have returned to work as “not reflecting the bleak realities on the ground”.

The MoF has said that nearly 70% of workers returned to work when Putrajaya eased virus containment measures on May 12 at the end of the movement control order (MCO).

The ministry also predicted that the Malaysian economy, like economies the world over, will contract this year.

The International Monetary Fund (IMF) has predicted that the world economy will contract by 3% this year due to the pandemic which has so far killed more than 432,000 people worldwide and infected more than 7.8 million.

The MTUC and employers associations have predicted that up to two million people could lose their jobs in the impending recession later this year.

Daim was a finance minister during the 1984-1985 recession when unemployment soared to 9%.

He believes the current financial crisis is not comparable to previous crises.

“The current crisis is worse than what we have ever experienced, worse than the 2008 global financial crisis, the 1998 Asian financial crisis and the 1930s Great Depression.

“It is also magnified by the US-China trade tensions. At the moment I don’t see an end in sight. That, essentially, is what we are facing now.”

Daim’s assessment is shared by the Bank of England which said the economic crisis is the worst in 300 years. The world’s largest economy, the United States, has seen massive lay-offs.

“Recent data shows that 41 million workers, or about 1 in 4 American workers has applied for unemployment benefits since the start of the lockdown.

“This is without precedent in American history, worse than the Great Depression of the 1930s. China, another big economy, is not expected to do well this year, is probably in recession.

“This contrasts sharply with the the 2008 crisis, when China grew by nearly 10% despite the crisis. The Chinese government has decided to drop its growth target altogether this year”. – June 12, 2020.