THE national Covid-19 immunisation plan, if successful, will restore the confidence needed for economic recovery, said economists.

They cautioned that even with immunisation, people and economic sectors cannot be lax about the standard operating procedure to prevent virus transmissions. This will need to continue to prevent new waves of the pandemic.

But immunisation will allow the government room to shift the country’s fiscal policy back to pre-pandemic times, said Universiti Tunku Abdul Rahman associate professor of economics Wong Chin Yoong.

Fiscal policy will then be able to return to boost expenditure and away from the current relief-oriented plans.

“The government can return to spending for long-term development, to focusing on improving systems and tax reforms,” Wong said.

However, even though vaccination will be positive for the economy, the country should not expect an immediate end to all problems.

The vaccination programme will help restore market confidence, which will in turn help the economy recover and ease market anxiety. More importantly, the uncertainty that has been plaguing businesses can come to an end, he added.

“Most things can return to their original state, although they may not fully recover. But at the very least, there can be some certainty for plans to be made.”

Tourism and related sectors, which are among the biggest victims of the epidemic, may also be the last to recover, Wong said.

Some players in these sectors, as well as industries that rely on transnational and inter-state movements, may never fully recover to pre-pandemic levels as the SOP against Covid-19 will continue even when inter-state travel is allowed and tourism picks up again.

The national vaccination plan is to be completed in February next year, but Wong said economic recovery can begin in the second half of the year, after more people are vaccinated in August.

About 26.5 million people or 80% of the population is targeted for vaccination, which will be conducted in three stages. Front-liners will be in the first phase from now to April followed by high-risk groups from April to August, and those above the age of 18 in the last phase.

Social and Economic Research Centre (SERC) executive director Lee Heng Guie said the vaccination plan will enhance market sentiment and the momentum for recovery.

“The recovery in all areas depends on the smoothness and speed of the vaccination plan. Our goal is to immunise 80% of the population but we must also bear in mind the challenges for those who are resistant,” he said of the programme, which is voluntary.

Like Wong, Lee also believes economic prospects as the vaccination programme proceeds, and the second quarter will be an indicator of recovery.

By the end of the second quarter, the country would be about mid-way through the second phase of the vaccine plan.

“If the results in the second quarter cannot be better than last year, there may be a problem.

“Growth rates fell so much last year. It is impossible that there will be no recovery this year. It just depends on the intensity. So, we will look at the actual growth in the second half of the year and the second quarter.”

On commodities, Lee said the current high palm oil and international crude oil prices will help Malaysia’s export performance.

Domestically, recovery will depend on consumption and the services industry and not just services in the tourism sector, which is still hampered by the inter-state travel ban.

Allowing inter-state travel will depend on how many people are vaccinated and how the immunisation plan progresses, Lee said.

Only then can it be safer to discuss tourism bubbles and green lanes with other countries, he added.

“Vaccination does not mean that you can relax. You still have to wear masks and follow the basic requirements to prevent the virus from spreading.”

Wong also suggests a targeted approach when vaccinating those above the age of 18 in the third phase.

“The ‘first come, first served’ approach by registration is rather passive.

“If we want to stamp out the virus and prevent it from spreading, we should consider targeted vaccination by looking at likely places where the virus will spread, such as workplaces, factories and offices.

“Workers here should be immunised first.” – February 24, 2021.