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Economic Recovery Plan to cushion economy from sharp contraction — Affin Hwang Capital

Economic Recovery Plan to cushion economy from sharp contraction — Affin Hwang Capital

Affin
Hwang Capital expects the upcoming Short-Term Economic Recovery Plan (ERP) to
cushion the domestic economy from a sharp contraction.

It
said the government had previously announced a RM266 billion Economic Stimulus
Package (PRIHATIN) to provide short term relief of about three to six months of
assistance to support the economy from the negative short-term impact of the
Covid-19 crisis.

“However,
the government guided that the ERP is needed to ensure growth in the domestic
economy is sustainable over the short to medium term,” it said in a research
note today.

According
to the Department of Statistics (DOSM), Malaysia’s Leading Index (LI), which is
used to anticipate the turning points in economic activity in the short term,
declined sharply to 4.9% in March 2020.

It
was its largest monthly fall since November 1991, as compared to a contraction
of 0.8% in February 2020, said Affin Hwang Capital.

The
DOSM also predicted that the country is heading into an economic recession in
the next four to six months.

Therefore,
it said the ERP is also expected to include some short-term stimulus to support
the domestic economy.

Yesterday,
the Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz revealed that the
Prime Minister Tan Sri Muhyiddin Yassin would unveil details of the ERP this
month with further measures to support domestic economic activities for the
period of June to December 2020.

The
ERP is expected to focus on three main objectives — empower people, propel
businesses and stimulate the economy, which are intended to capitalise on the
opportunities arising from the Covid-19 crisis for the country’s future
economic development.

Source: Bernama 

Posted on : 03 June 2020
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