PUTRJAYA must roll out another RM45 billion economic stimulus package to offset the effects of the pandemic-linked recession, said former finance minister Lim Guan Eng today.

Lim, who is DAP secretary-general, said more aid was needed to ease the financial hardships of Malaysians.

The appeal comes after Malaysia registered a record GDP contraction of 17.1 % in the year’s second quarter.

Lim said the Malaysian economy was officially in recession after the GDP shrank for two consecutive quarters

“Seasonally adjusted real GDP fell 16.5% quarter-on-quarter (q-o-q). This compares with the first quarter decline of 2% q-o-q. With two consecutive q-o-q declines, Malaysia has technically entered a recession,” he said in a statement.

“There is greater urgency for another round of RM45 billion economic stimulus package to prevent deflation, including financial aid to small and medium enterprises and extending the moratorium on bank loans by another six months when it expires on September 30.
 
“Failure to do so will cause greater hardship and even bankruptcy as many will struggle to service their borrowings, either for cars, homes or business purposes.”

The business and industrial sectors were hard hit when the government imposed a nearly three-month shutdown in a bid to to contain the spread of Covid-19.

Many non-essential businesses subsequently collapsed after the forced closing.

The government in June announced a RM35 billion stimulus package to revive the economy ravaged by Covid-19 and the subsequent movement control order.

Prime Minister Muhyiddin Yassin, in a special address to the nation, said the economic recovery plan (Penjana) have three areas of focus: empowering people, propelling businesses and stimulating the economy.

Economists have said the MCO cost the Malaysian economy RM2.4 billion a day.

Meanwhile, Lim added that Malaysia’s GDP performance was the worst among middle and upper income Asean countries that have reported their second quarter figures.

“Our neighbours – Indonesia, the Philippines and Singapore – all registered smaller declines than we did,” he said, adding that should Putrajaya have moved faster to mitigate the recession, the impact would not have been so great.

“The economic data shows the government has not been doing enough to mitigate the recession. Bank Negara Malaysia’s data shows the government’s second quarter operating expenditure fell 2.1% from a year ago, compared to a 5.2% increase in the first quarter.

“If the government had done more, more quickly, we could have experienced a shallower recession.

“The unemployment rate of 4.9% in June hides the fact that there are many professionals such as pilots doing jobs other than flying.

“To put it simply, they are underemployed,” Lim said. – August 16, 2020.