Guan Eng Calls For New Stimulus Package After Gdp Contracts

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Former finance minister Lim Guan Eng says Indonesia, the Philippines and Singapore registered smaller declines in their GDP.PETALING JAYA: Lim Guan Eng has urged Putrajaya to introduce another stimulus package, similar to the one unveiled to battle the impact of the Covid-19 pandemic, following the recent contraction in gross domestic product (GDP)
This is to prevent deflation, the former finance minister said
The government had in April allocated RM45 billion to cushion the economic impact of the virus outbreak
It was announced this week that Malaysia’s GDP had contracted 17.1% in the second quarter of the year after a 0.7% uptick in the last quarter, marking the lowest since the financial crisis in 1998
Lim said the GDP performance is the worst among middle- and upper-income Asean countries that have reported their second quarter figures
He pointed out that neighbours Indonesia, the Philippines and Singapore registered smaller declines
Despite “the political spin”, he said, the economic data shows the government has not been doing enough to mitigate the recession
Lim said Bank Negara Malaysia’s data shows the government’s second quarter operating expenditure fell 2.1% from a year ago, compared to a 5.2% increase in the first quarter
“If the government had acted faster, we could have experienced a lower recession,” he said in a statement
He said the central bank also noted that wages in the private sector fell by 5.6% in the second quarter from a year ago after rising 2.1% in the first quarter of 2020
This, he said, points to the real risk of deflation that could hurt living standards
In June, the consumer price index (CPI) deflated by 1.9% year-on-year after decreasing by 2.9% in May. Lower growth and lower prices, Lim said, “are bad economic news”
“There is greater urgency for another round of RM45 billion economic stimulus package to prevent deflation, including financial aid to small and medium enterprises and extending the moratorium on bank loans by another six months when it expires on Sept 30.”He warned that failure to do so will cause greater hardship and even bankruptcy as many will struggle to service their loans, either for cars, homes or businesses. - FMT

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