WITH the 6R approach, the government has successfully flattened the pandemic curve through the first three Rs, which are resolve, resilience, and restart. The next three Rs — recovery, revitalise, and reform — are vital in redesigning and reforming the economy for a much stronger and better Malaysia post-pandemic era.
The RM295 billion stimulus packages unleashed so far, in the forms of Prihatin, Prihatin Plus, and Penjana, are equally unprecedented in Malaysian history and which account for around 17 per cent of the total gross domestic product, amongst the largest in the league of the developing world.
Even the World Bank Group has acknowledged Malaysia's effort as among one of the best in terms of protecting the welfare of the most vulnerable and preserving business communities.
Challenges moving forward remains. If we take things for granted, the possibility of going back to the first phase of the Movement Control Order cannot be ruled out.
An economic recession may well turn into an economic depression if no appropriate measures are taken at the right time. The future challenges for the Malaysian economy correspondingly depends on the development of the global economy.
The World Bank has estimated that the global economy will contract by 5.2 per cent this year, the worst recession since World War 2. They also predict around 90 per cent of world's economies will plunge into a recession this year. On the other hand, the International Monetary Fund forecasts the world economy to shrink by 4.9 per cent for this year.
On top of this, we have the United States-China trade war in the backdrop, which has clearly gone from bad to worse and thus disrupting the supply global chain.
In the first quarter of this year alone, Malaysia's net exports plunged to a new low of 37 per cent, with exports and imports contracting at 7.1 and 2.5 per cent respectively. So, what's next?
FIRSTLY, make sure that the pandemic curve stays flat.
SECONDLY, the government may consider to continue some crucial short-term strategies, such as cash handouts, wage subsidy and loan moratorium.
With our strong economic fundamentals and solid financial system, the capacity is there to even execute another round of stimulus package if needed.
THIRDLY, which is most important, is to redesign the economic model for medium and long term to facilitate the new normal of the economy post-Covid-19.
The government has recently announced that by October this year, the medium and long term economic recovery plan will be announced, followed by the 2021 Budget in November, and the 12th Malaysia Plan in January next year.
Making the economy competitive is key. Reducing the debt and deficit levels are paramount. But how can this be achieved if the targeted growth rate under the Shared Prosperity Vision 2030 is for the growth rate to grow at 4.7 per cent per annum on average from next year until 2030?
Should prosperity be redefined, especially from the non-monetary perspective? How ready are we towards digitalisation? Do we understand digitalisation from the economic dimension per se, or from the psychological and philosophical implications of it towards us as a human being? Can the people and planet earth be at the centre of the economic objective?
Malaysia, and the world at large, are indeed at the crossroads. This pandemic has given us another chance to make our lives better than ever before.
The writer is Economic and Financial Policy Institute associate professor and deputy director at Universiti Utara Malaysia