A nation reeling from one turmoil after another, and possibly continuing, what can make it any worse for Malaysia?
By Jan Yong
“Bursa plunges to lowest level in almost 10 years over political turmoil” – reported on February 24th. Barely 2 weeks later, another earth-shattering news screamed – “Crude oil plunges 30% – biggest drop in 29 years”. The last time oil price plunged in 2016, the entire oil and gas, and related industries underwent a massive restructuring. How will this latest development impact Malaysia?
As a net oil producer, Malaysia will be severely affected – yet again. Coupled with Covid-19 outbreak, and political uncertainty, the outlook remains gloomy for the rest of the year.
The tourism industry has practically collapsed – with RM6 bil of reported losses as of 15 February, and counting. Airlines are struggling – Malindo Air recently announced a pay cut of 50% for all staff and two weeks of unpaid leave for some. Genting cruises are also badly affected with some staff told to take unpaid leave indefinitely.
Things can only get worse as the number of Covid-19 infections continues to climb in Malaysia.
With a new unelected government at the helm which will certainly be challenged by the previous government (now the Opposition), the stage is set for a long period of political uncertainty, possibly all the way till the next election in 3 years’ time.
Meanwhile, the economy suffers and with oil prices at new lows (at one point, dipping below USD30 per barrel), any further bad news will cause the economy to slide further.
Covid-19 has truly wrecked havoc with economies around the world. The worst part is we don’t know when this will end.
In Hong Kong, people are so tired of the situation – first the prolonged anti-government protests and the US-China trade war, then the virus outbreak, that more and more are seeking to emigrate.
As reported by South China Morning Post, the desperation is reflected in the number of applications for “certificated of no criminal conviction”, a necessary document for emigration applications, which surged by almost 24% in the first two months of 2020, according to the Hong Kong Police Force.
“Homeowners are also dumping their properties in Hong Kong for as much as HK$11.6 mil (US$1.5 mil) in losses to pack up their bags due to the city’s dire economic prospects,” it said recently.
With world stock markets plunging as well, we are very possibly at the beginning of an American bear market and a worldwide recession. China’s fall in GDP will take months to recover. Truly, when both China and America sneeze, the whole world catches a deadly flu.
A recession is identified by a fall in GDP in two successive quarters. In the last quarter of 2019, Malaysia’s GDP has fallen to 3.6% from 4.4% in the 3Q. It is estimated based on ground reports that the first quarter of 2020 will also see a decline in GDP. Thus, Malaysia is already entering into a technical recession.
Without any bright spots in the near future (the new government certainly does not elicit much confidence as much as it wants to believe), Malaysia is unlikely to see a reversal in fortune anytime soon.
2020 has indeed turned out to be annus horribilis – a year of misfortune, incidentally contrary to what some Feng Shui masters have predicted.