THE worst is over for the Malaysian economy now that the national immunisation drive against Covid-19 is underway, unless new vaccine-resistant strains of the coronavirus emerge, economists said.

While things are looking up for the economy on the domestic and global fronts, full recovery can be hampered if new virus variants are found or if vaccination programmes are unsuccessful.

That said, there are a number of reasons indicating that the worst is over, said Dr Shankaran Nambiar, head of research at the Malaysian Institute of Economic Research.

“With the relaxation on movement controls and opening up of the economy, we seem to be moving towards normalcy.

“Many sectors are picking up – this is the case with manufacturing, retail and services – though not for tourism and hospitality,” he told The Malaysian Insight.

The global economic environment is also not as challenging as it was a year ago, he said, adding that Malaysia’s largest trade partners are holding up.

“China’s growth, at the worst of times, did not run into negative territory. The growth outlook for the US is improving. Forecasts for the US point to a rise by 2% in Q1 of 2021 and a whole year growth rate of 4.5%,” he said.

On the commodities front, things are also positive with marked improvement in crude oil and palm oil prices.

“With the vaccination rollout, other sectors such as tourism, hospitality, wholesale and retail will see more positive improvements,” Nambiar said.

“It is likely that a more stable economic environment will come up in the second quarter of 2022, unless there is a new wave or a new variant of the virus.”

Finance Minister Tengku Zafrul Tengku Abdul Aziz recently told Bernama that the systematic rollout of the national Covid-19 immunisation programme and the country’s economic recovery plan will be key in driving the economy back on track and making it stronger by the end of year.

He added that the nation’s gross domestic product has shown signs of recovery since the movement control order (MCO) was first imposed in March last year.

Sunway University Business School Professor of Economics Dr Yeah Kim Leng also feels the worst is over unless new variants of the virus emerges or the vaccination programme falters.

“Nonetheless, the four-digit daily new cases that have persisted since the Covid-19 third wave hit the country late last year and the (impact of the) ensuing second MCO continues to dampen the recovery momentum,” he said.

The national Covid-19 vaccination programme began on February 24. For the past week, new cases are still four-digits but less than 2,000 a day. A month ago, the figures exceeded 4,000 a day

Yeah said the national vaccination drive has brightened prospects of suppressing the pandemic and allowing the shift to recovery MCO for more states, and the eventual uplifting of all restrictions.

However, the impact of movement restrictions had been uneven on economic sectors, with some more hard-hit than others, such as aviation, hotels and restaurants, retail, entertainment and tourism-related industries.

Economic recovery plans should be targeted to helping these worst-affected sectors get back on their feet, he said.

“This at the same time will kick start strategies to revitalise and restructure the economy on a higher value added and sustainable development path,” he said. – March 14, 2021.