"The near-term outlook, however, is unusually uncertain at present."The pandemic coupled with a changing world of work also raise the need for a more enhanced social protection system in Malaysia," the World Bank said in 'Surviving the Storm', the latest edition of the World Bank's Malaysia Economic Monitor, released today.
It said aggregate investment contracted for the fifth consecutive quarter by 4.6 per cent in the first quarter of 2020 (Q1 2020), as compared to a contraction of 0.7 per cent in Q4 2019, with broad-based weaknesses in both private and public investment.Due to weak external demand, Malaysia's exports of goods and services declined for a third consecutive quarter by 7.1 per cent in Q1 2020 (Q4 2019: -3.4 per cent), the largest decline since the global financial crisis in 2009, according to the report.
Private consumption moderated to 6.7 per cent in Q1 2020, down from 8.1 per cent in Q4 2019, largely reflecting the substantial impact of COVID-19 and the Movement Control Order on retail, travel, leisure, and recreational spending, and consumption of durable goods during the previous period.
World Bank Country Manager for Malaysia Firas Raad said important social protection measures were needed to help vulnerable Malaysians survive the current economic storm and thrive in a new post-pandemic reality.
"Protecting livelihoods is important so that those who have lost their jobs and businesses are able to get back on their feet and contribute to Malaysia's economic recovery," he said.
The report has recommended that government efforts in the near-term to focus on supporting relief and recovery efforts by deepening social assistance for lower-income households, improving the delivery of social protection programmes, and promoting job recovery.
As the recovery continues, further rounds of cash transfers will remain vitally important to mitigate acute financial strains among the most vulnerable groups in the Malaysian society, and to support domestic consumption and human capital development during a severe economic downturn.
Over the medium and long term, support for lower-income groups can be gradually expanded to ensure that Malaysia's social protection system provides a minimum level of protection to all households and individuals in need.