KUALA LUMPUR – A stronger push towards wider vaccination and herd immunity will be key to the domestic recovery and should facilitate an economic rebound as emergence of new COVID-19 variant poses high risk, Moody’s Analytics’ economist Sonia Zhu said.
Malaysia’s economy contracted by 0.5% year-on-year in the March quarter, following a 3.4% slump in the fourth quarter of 2020.
“Despite a gradual easing of gross domestic product (GDP) contractions, conditions will likely stay weak in the coming quarter due to the latest movement control order (MCO),” she said in a statement on May 14.
Prolonged lockdowns will be a tricky situation to manage especially for daily-wage earners, small businesses and families financially battered with each MCO.
A more infectious COVID-19 variant forced Malaysia to declare a nationwide MCO from May 12 to June 7, 2021 to curb the surge in new daily cases of the virus.
Malaysia logged its highest death toll of 59 on May 20, since the pandemic started as the public health system reaches its capacity limits.
Besides Malaysia, neighbouring Southeast Asian countries such as Singapore and Indonesia also are facing a surge in COVID-19 infections.
The MCO comes at an inconvenient time just days before the end of Ramadan, which is the Malaysian Muslim community’s biggest annual celebration.
“Social events, indoor dining, and travel are prohibited during the MCO, hurting service industries such as food, retail and hospitality. Household spending will dwindle during a time when it is normally expected to peak.”
“Hence, a stronger push towards wider vaccination is key, she said, adding that at present, only 3.4% of Malaysia’s total population has received at least one dose of a vaccine.
The slow vaccination rate casts doubt on the ability to reach the herd immunity target by the end of 2021, tilting the balance of risks to the downside for the subsequent quarter, opined Zhu.