KUALA LUMPUR: Malaysia's economy can grow 3.8 per cent this year to post a gross domestic product (GDP) of RM1.47 trillion under the best possible scenario, if the Movement Control Order (MCO) only lasts until April 28, according to a think tank.
The country's economy can also contract 1.02 per cent with a GDP of RM1.41 trillion under the worst case scenario, according to the Malaysian Institute of Economic Research (Mier).
Mier deputy director Professor Dr Jamal Othman said this was based on the world oil price of around US$35 per barrel in the second half of 2020 and throughout 2021, besides the government's RM260 billion Prihatin stimulus package.
He said oil price falling between US$20 and US$30 a barrel would lead to a drop of GDP growth rate from the baseline by as much as 1.0 per cent.
This may result in government revenue loss by RM11 billion and consequently private and public consumption fall by as much as RM55 billion.
"Had there been no Covid-19, our GDP should be higher by RM72 billion this year after taking into account the Prihatin stimulus package. Without the stimulus, our GDP loss will be a lot larger by RM123 billion," Jamal said at a virtual press conference today.
He said Malaysia might soon reach the peak of the accumulated total cases of Covid-19 if the current plateauing of new cases remains until April 28.
"We had previously estimated that any extension of the movement control order (MCO) by two weeks from April 14, could lead to economic contraction by 2.0 per cent of GDP growth.
On the other hand, a premature economic opening (without the strictest of containment protocols), may lead to the risk of reinfection," he added.
Mier also projected that under the worst case scenario, there would be about 2.4 million job losses. But this could be reduced to 1.46 million jobs,, primarily non-salaried jobs, thanks to Prihatin.
"The Prihatin stimulus has been able to protect 955,000 jobs, while income losses will be about RM128 billion," Jamal said.
He said private consumption might fall by RM106 billion with the overall prices (GDP price index) expected to reduce by -3.33 per cent this year.
"We observe the impact on individual prices for each sector. Some industries may see fall in prices. However, for the agricultural (food grains and processed foods), we expect the price to rise including produces and consumers-related sector," he said.
In the best case scenario, he said MIER estimated that real GDP losses would be RM7 billion and without the Prihatin package, the country's GDP could have incurred RM60 billion in losses.
Meanwhile, job losses will be at 28,590, presumably non-salaried jobs and 65 per cent unskilled workers, while some 1.05 million jobs would be protected by the government's Prihatin package.
"Income losses are expected at RM46.4 billion and private consumption is likely to fall by RM38.6 billion with the overall price reduction of -0.54 per cent," he said.
On the GDP outlook 2021, Jamal said less non-tariff, trade restriction and production output would increase trade by 2.0 per cent and Malaysia's GDP may grow by 4.3 per cent, in the best-case scenario.
"When production output drops, we can see a direct impact to the economy in terms of consumer income and consumption," he added.