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Covid-19: How It Affects the Economy and Unemployment Situation?

A few key observations on the current economic and unemployment situation in Malaysia.


CHEAP MONEY around as Bank Negara Malaysia reduced OPR to 2.0%.

Where did this money go? The stock market instead of the real economy. Is a stock market bubble building? High possibility.


The Government planning to borrow RM35 billion for economic stimulus.

Will that crowd out funding for the private sector? Possibly, if companies default on their loans and banks have less room and appetite to lend. Some banking stocks are trading at a discount to their book values, meaning investors are expecting the banks’ financing assets to be significantly impaired.


FOCUS ON TECHNOLOGY

Most companies are facing dwindling demand for their goods and services. Technology is superfluous when there is no business. More companies will close and with them, jobs.


LABOUR FORCE

The most effective way for the economy to relaunch and be on a solid foundation is to increase PRODUCTIVITY. Besides technology and process changes, the mindset of the workforce must change. Do any of the labour enhancement initiatives tackle that? Is the education system supporting that change? The answer is not visible, if any.


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