Struggling sectors need targeted help, says World Bank rep

PETALING JAYA: Sectors severely affected by the Covid-19 pandemic will need additonal targeted assistance, a World Bank economist says, with industries like tourism and hospitality expected to take longer to recover.

The World Bank’s lead economist for Malaysia, Richard Record, said sectors such as trade and manufacturing are back on their feet thanks to China’s economic recovery boosting external demand.

However, he raised concerns of a possible “K-shaped economic recovery” in which a dual economy of sorts arises due to continued repressed domestic demand in the service sector while external demand rebounds.

“Some parts of the economy are bouncing back, some are hoping to bounce back while others continue to take time to recover.

“The public sector has to employ economic policies to provide targeted support for these sectors that will see a slower pace of recovery,” he said at the 2021 Malaysia Economic and Strategic Outlook Forum, held virtually.

Record also said it remains important for the government to ensure the vaccines are rolled out without delay to ensure a resumption of domestic economic activity.

However, he said a big question mark over Malaysia was the ongoing political uncertainty, adding that there was an undoubted impact on foreign investment.

“A significant share of foreign private sector investors are waiting to see what happens. There are many causes for uncertainty, the pandemic and movement restrictions included, but the uncertainty of domestic politics has an impact as well.”

Meanwhile, Malaysian Rating Corporation Berhad (MARC) senior economist Firdaos Rosli said stabilising the Covid-19 situation locally would not mean much if neighbouring countries and nations around the world continue to keep their borders closed.

He also said the rise in unemployment, the likes of which has not been seen since the 1980s, was of particular concern, especially when inflation is projected to progressively rise this year.

“The price of crude oil per barrel is now at US$63. MARC projects a 2% global inflation this year on average. It remains to be seen how at a global stage this would be translated to the domestic economy,” he said. — Free Malaysia Today