Malaysia: Government pumped in extra fiscal stimulus – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting review the latest decision by the Malaysian government.

Key Quotes

“The government announced a fiscal package (PEMERKASA) yesterday (17 Mar) worth MYR20bn (~1.3% of GDP), of which MYR11bn is a direct fiscal injection from the government. This brings total fiscal assistance to MYR340bn over six packages since the start of the pandemic.”

“The package aims to jumpstart the economy with five focus areas and 20 initiatives. Key measures include higher allocations for the COVID-19 vaccine program (MYR2bn), cash handouts for the B40 households (MYR1.2bn), wage subsidy extension (MYR0.7bn), subsidies for smart device purchases for B40 households (MYR0.5bn), grants and microcredit (MYR1.6bn), small projects nationwide (MYR2.5bn), and electricity bill discounts (MYR135m). Fuel subsidies worth MYR3bn will also be spent to cap domestic fuel prices and manage inflation risks.”

“The latest fiscal package comes as new daily infections are on a downtrend, followed by easing of movement restrictions this month to support the economy. With the national vaccine program underway, the government said a targeted COVID-19 containment strategy will be enforced to provide more economic certainty. The additional support from PEMERKASA will help address concerns of lingering pandemic risks and uneven recovery. It also offers new initiatives to strengthen the country’s competitiveness with specific focus on attracting investments, boosting trade, and driving digitalisation. We maintain our 2021 GDP forecast of 5.0% (2020: -5.6%).”