Malaysia PM Muhyiddin unveils RM20 billion economic stimulus package

‘Malaysian Prime Minister Muhyiddin Yassin announced a new economic stimulus package worth RM20 billion (US$4.8 billion) on Wednesday (Mar 17), one year after Malaysia first imposed a lockdown to curb the spread of COVID-19. This is the sixth package unveiled since the start of the COVID-19 pandemic.’

Read here (Channel News Asia, Mar 17, 2020)

Nonstimulus arithmetic: Why the American Rescue Plan has to be big -- Krugman

‘We are not in a conventional recession — a decline in output due to insufficient aggregate demand. What we’re suffering from, instead, is a partial lockdown, the result of both public policy and private choices, that has sharply curtailed high-infection-risk activities, like indoor dining.

‘Pumping up overall spending with fiscal and monetary policy wouldn’t send diners back into restaurants, nor should it. So we aren’t experiencing a normal output gap, something that should be closed by stimulus. It’s actually not clear whether we even want employment and GDP to be higher before vaccination gives us herd immunity.

‘What, then, is the role of policy? As some of us have been arguing all along, it’s not stimulus, it’s disaster relief: an attempt to shore up the living standards of those hurt by the temporary lockdown, as well as providing resources to deal with the pandemic itself. Or as I recently argued, you can think of what we’re doing as being something like fighting a war — special expenditure in the face of an emergency.’

Read here (paulkrugman.substack, Feb 10, 2021)

UN humanitarian chief: After COVID-19, it’s in everyone’s interest to help the world's poorest countries

‘Our best estimate is that the cost of protecting the most vulnerable 10 per cent of people in the world’s poorest countries from the very worst impacts of the pandemic is approximately $90 billion. $90 billion is a lot of money. But it is an affordable sum of money. It is equivalent to just 1 per cent of the global stimulus package the world’s richest countries have put in place to save the global economy...

‘Some may be sceptical that additional resources of that magnitude can be generated in the current circumstances. That is not my experience. After the financial crisis of 2008 fundraising for UN-coordinated humanitarian appeals had increased by more than 40 per cent by 2010. That was a result of human generosity and empathy – but also a calculation of national interest in the donor countries.’

Read here (OCHA, May 4, 2020)

MCO extension has grave consequences, UOB Kay Hian warns

‘The government’s direct fiscal injection, which amounts to about 2.4% of gross domestic product, already pales in comparison to many developed countries, which have shorter lockdown periods. We can no longer safely assume a U-shaped economic recovery and near-full recovery in the fourth quarter of 2020 even if the government were to throw in more financial lifelines for the deeply wounded small and medium enterprises – we fear it would be “too little, too late”.

‘“We also fear that the country’s unemployment rate will spike well beyond the 4% baseline assumed by the government.”

Read here (The Edge, April 24, 2020)

‘Dignity not destitution: An ‘economic rescue plan for all’ to tackle the Coronavirus crisis and rebuild a more equal world’. A paper by Oxfam

Oxfam calls for US$2.5 trillion plan to tackle the pandemic and prevent global economic collapse in a paper:

‘New analysis shows the economic crisis caused by coronavirus could push over half a billion people into poverty unless urgent and dramatic action is taken... We can only beat this virus through coming together as one. Developing countries must act to protect their people, and demand action from rich nations to support them. Rich country governments must massively upscale their help – led by the G20. This paper lays out an Economic Rescue Plan For All that meets the scale of the crisis, mobilising at least $2.5 trillion dollars to tackle the pandemic and prevent global economic collapse. It prioritises helping people directly: giving cash grants to all who need them. An immediate suspension of the debt payments of poor countries, combined with a one-off economic stimulus by the IMF and an increase in aid and taxes, can pay for this.’

Download here (Oxfam, April 9, 2020)

Shockwave: Adam Tooze on the pandemic’s consequences for the world economy

This lengthy essay begins by painting the economic background of this crisis, covering the weaknesses of the globalised system and its over-dependence on government stimulus post-2008. There were detractors though. ‘True conservatives, as distinct from those merely wedded to the religion of the stock market, welcomed the prospect of a shakeout. It was time for a purge, time to slim down the businesses that had gorged on too much cheap funding, time for a return to discipline." However, as we know, it was not to be.

When Covid-19 hit, the three main economic blocs responded, strapped to the underpinnings of their own socio-economic systems. Many East Asian countries, notably China, South Korea, Hong Kong, Taiwan and Singapore, employed ‘the hammer and the dance’ by hitting the virus hard and fast. Europe ended up in an uncoordinated and dispiriting stalemate. ‘From the point of view of the wider world, what matters is that Europe does not unleash a sovereign debt crisis.’ In the US, ‘more than the flame-out of Trump, is the gulf between the competence of the American government machine in managing global finance and the Punch and Judy show of its politics. That tension has been more and more glaring since at least the 1990s, but the virus has exposed it as never before.’

‘If you swiftly declare an emergency and are prepared to interrupt business as usual, both the medical and economic costs of confronting the virus appear more reasonable, and the conventional priorities of modern politics remain basically in place... As the Europeans and Americans have discovered, once you lose control all the options are bad: shut down the economy for an unforeseeable duration, or hundreds of thousands die.’

Tooze concludes that ‘for those of us in Europe and America these questions [about opening up] are premature. The worst is just beginning.’

Read here (London Review of Books, April 3, 2020)

Questions on the government stimulus package

‘The way the government has crafted the package raises a host of questions. Does it help those in greatest need? Is it the most effective way to help the needy and keep the economy intact? Is the principle of sharing pain, i.e. the well to do should do their part to sacrifice a bit of their income for the needy, adhered to? Are some groups getting more at the expense of others?’

Read here (FreeMalaysiaToday, April 1, 2020)

RM250bil stimulus: Priorities in response to a three-faceted crisis

Commentary by Jeyakumar Devaraj

“The first aspect and the precipitating cause of this crisis is the Covid-19 pandemic that is sweeping the world. The pandemic is causing a massive overload on the medical services even in the richest countries in the world...

“The second aspect of the crisis is that many Malaysians in the B40 and M40 groups, especially daily rated workers and small business people have already run out of their meagre savings after 10 days of the Movement Control Order (MCO) and are already having difficulty in providing food for their families...

“The third aspect of the problem is that our small and medium-sized enterprises (SMEs) which employ about 65percent of our workforce are seriously under threat. The lockdown means that the vast majority of these SMEs have had no income since March 18.

“Given this bleak scenario, several measures have to be implemented quickly to address each aspect of the crisis. The capacity of our health care system to respond to the Covid 19 epidemic has to be bolstered, measures to ensure that the poorer 50% of our population have access to food and other basic necessities have to be rolled out and another set of measures to ensure that as many as possible of our SMEs are kept viable so that they can provide employment to the rakyat when we are able to restart the economy.”

Read here (Malaysiakini, March 29, 2020)

Covid-19 package: The woes of a small business owner

‘There is a saying, “Give a man a fish and you can feed him for a day. Teach a man to fish and you feed him for a lifetime”. So help small businesses stay afloat.

‘Revenues are down. Margins, if any are non existent. Wages, rentals and raw material are the three main costs of business. Government assistance is needed to subsidise one part of the expense to keep Malaysians employed.

‘We have been told that we are fighting a war with an invisible enemy. We issue a one-off  “Coronavirus War Bond” to fund this fight to keep jobs. It will break the budget deficit ceilings. What alternative do we have?’

Read here (FocusMalaysia, March 29, 2020)