KUALA LUMPUR, July 17 (Bernama) — Global economic recovery is expected to accelerate in the second half of this year after the massive contraction in the first half due to the COVID-19 pandemic.
Chinese e-commerce giant JD.com chief economist Jianguan Shen said purchasing power has improved tremendously in the second quarter, boosted by the stimulus packages announced by governments worldwide.
“The stimulus packages has managed to reduce the economic impact on individuals as well as companies that had been affected by the economic shutdown,” he said during the Global Economic Outlook Post-COVID-19 sharing session, organised by the World Economic Forum (WEF).
On Thursday, China reported that its gross domestic product grew by 3.2 per cent in the second quarter (Q2) after a steep 6.8 per cent declined in Q1, surpassing expectations.
Meanwhile, Malaysia’s economy is expected to see a sharp contraction in Q2 due to the implementation of the Movement Control Order (MCO), but a recovery is expected in Q3 following the resumption of economic activities.
However, Shen said that while countries are on the path to economic recovery, governments must not forget the low-income group which is recuperating at a much slower pace.
“The fastest recovery is recorded in cities as well as among high-income workers, as work has been resumed at a large scale.
“Some sectors, especially tourism, are still not fully operational as the borders are still closed, and most of the workers in the tourism sector are low-income earners,” he said.
In Malaysia, domestic tourism has boomed with the gradual easing of the MCO, but the industry’s recovery is still slow.
According to the Ministry of Tourism, Arts and Culture, the tourism industry suffered losses to the tune of some US$10.53 billion (RM45 billion, US$1 = RM4.26) as of June this year, following the closure of international borders and cancellation of events due to the COVID-19 pandemic.
Meanwhile, WEF managing director Saadia Zahidi said that post-COVID-19, it is important for countries to conduct a post-mortem to gauge the strength of their economy.
“COVID-19 has revealed our economy’s vulnerabilities and emphasised the importance of stimulus to boost the local economy. However, governments need to ensure they have enough fiscal space to do so,” she said.
Malaysia has launched three stimulus packages, namely the PRIHATIN Economic Stimulus Package, Additional PRIHATIN SME Economic Stimulus Package and the PENJANA Short-Term Economic Recovery Plan worth US$69.08 billion (RM295 billion) to boost the local economy following the aftermath of the COVID-19 crisis.
— BERNAMA