When will Malaysia's economy recover?

As a result of the impact of the triple Black Swan events, there is a possibility that Malaysia will be experiencing a recession in 2020 with an estimated base case growth at -0.5% by World Bank, with Maybank Kim Eng projecting a -3.5% growth. However, no downturn will last for long. The deeper the drop in economic growth, the bigger the jump towards recovery.

A recent study by the International Strategy Institute, shared that a 2.9% contraction in GDP could result in an unemployment of 2.4 Million Malaysians, which is roughly 10% of the workforce.

There does not seem to be a strategy by the government on job creation, a high level of consumer debt, and adding to this, the resulting supply shock impact of the just ended oil crisis will adversely impact the government’s oil revenue. As a trading and exporting nation, Malaysia would not be immune to the drop in imports of non essential goods from major trading partners.

Many economists and analysts are projecting that Malaysia and the global economy will likely have a wider “U” shaped recovery, which, based on stimulus packages announced by major economies and progressively announced by the Perikatan Nasional Government, allows for a possible avoidance of an “L” shaped recovery.

Nonetheless, with major economies at different stages of control of the pandemic, it will take longer than expected for an economic reboot to take place. This along with an optimistic vaccine cure in 18 to 24 months time, with a curtailed credit ability of consumers will possibly skew the recovery curve towards an “L” shape scenario.

- Article by Izmir Mujab & Remakantan Nair

Pengusaha PKS disaran terokai e-bazar - Jalilah Baba

KUALA LUMPUR: Pengusaha perusahaan kecil dan sederhana (PKS) termasuk peniaga di bazar Ramadan disaran untuk meneroka peluang dengan membina perniagaan digital menerusi platform e-bazar.

Penasihat dan ahli Majlis Kehormat Persatuan PKS Malaysia, Datuk Jalilah Baba berkata, pengusaha perlu belajar dan menyediakan diri untuk menguruskan platform baharu berkenaan.

"Pengusaha PKS perlu berfikir secara serius bagaimana untuk menguruskan (perniagaan melalui platform baharu) kerana kali ini kemungkinan besar tidak akan ada bazar secara fizikal.

"Platform e-bazar ini juga akan memberi peluang kepada pengusaha PKS untuk mengembangkan perniagaan mereka dengan lebih efisien.

"Jadi, adalah penting supaya pengusaha PKS belajar memasarkan produk mereka menerusi platform digital yang disediakan," katanya yang juga Pengerusi Kumpulan PKT Logistics Group kepada Astro AWANI.

Baru-baru ini, beberapa negeri termasuk Kedah, Selangor, Negeri Sembilan, Kelantan dan Pulau Pinang mengumumkan tiada penganjuran bazar Ramadan pada tahun ini berikutan usaha mengekang penularan COVID-19.

Sebelum ini, Setiausaha Agung Gabungan Persatuan-Persatuan Penjaja dan Peniaga Kecil Melayu Malaysia, Mohamed Zamri Mohammed, dilaporkan berkata sebuah laman web e -bazar akan dibangunkan bagi urusan jual beli pada bulan Ramadan.

Mohamed Zamri memberitahu, secara keseluruhan lebih 100,000 peniaga bazar di seluruh negara terjejas berikutan wabak COVID-19 kerana tidak dapat menjalankan perniagaan dengan kehilangan pendapatan dijangka mencecah RM50 juta.

- Astro Awani

More difficult to get funding for SMEs from Malaysian Banks

Source: Bank Negara Malaysia

Crewstone anticipates that there will be a lack of credit availability for SMEs and privately held middle market companies that will begin to ramp up production for both essential and discretionary products and services. We are looking at providing liquidity to SMEs that have strong fundamentals, book orders and low gearing.

These target SMEs would have demonstrated resilience during the current economic challenges and are best positioned to thrive as the national and global economy recovers post-COVID-19. Additionally, there may be hidden gems among these companies that would be primed for an IPO in the next 2-3 years when global and domestic economic recovery moves at a higher momentum.

There has been a noticeable trend over the past two decades where banks been steadily moving away from financing businesses and gravitating towards consumer-related loans. This has made loan sourcing for most privately held middle market companies a challenging task.

With the current lack in market liquidity, further exacerbated by even lower interest rates, banks will be further reluctant to lend to businesses, particularly middle market companies. The looming global recession is expected to happen sometime this year, with many experts providing conflicting data and predictions on when the market would bottom out.