Malaysia will announce a stimulus package early next month as analysts slash their growth forecasts to account for the impact of the coronavirus outbreak.
The package will involve all ministries, Transport Minister Anthony Loke said on Thursday. Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunos earlier said the measure will seek to support those affected by the coronavirus, including tourism and manufacturing.
Fitch Solutions cut its 2020 growth expectation to 3.7 percent, from 4.5 percent, while RHB Research and Oversea-Chinese Banking Corp. eased their forecasts to 4 percent. That’s far short of the government’s target for 4.8 percent. Economic expansion missed estimates in the fourth quarter in posting 3.6 percent, the slowest pace since 2009, and may ease further as measures to contain the virus’s spread stifle economic activity.
“We do acknowledge it will impact us, particularly in the first quarter,” Shamsiah said of the virus on Wednesday. She didn’t give an estimate, citing the unpredictable nature of the outbreak.
The impact already is reverberating across Malaysia’s industries.
Banks including CIMB Group and Malayan Banking are offering leniency on loan payments for customers affected by the coronavirus outbreak.
Hotel cancellations soared when China announced the travel ban for its citizens, according to Yap Lip Seng, head of the Malaysian Association of Hotels. “Our best hopes are to minimize losses,” he said. If the government doesn’t step in, “the industry may just collapse.”
Palm oil, which makes up 39 percent of Malaysia’s farm output, saw its blistering rally cut short amid concern the virus will curb demand in the world’s biggest market. The price has lost 16 percent from its three-year high on Jan. 10 despite falling supply.
ViTrox, a supplier to Foxconn Technology Group, expects minor disruption in supplies from China and slight delay in delivering its products, said Chief Executive Officer Chu Jenn Weng. “We believe the impact is just temporary,” he said.
The stimulus package will offset some risks to the economy, with recovery likely to be seen in the second half of the year, RHB’s Ahmad Nazmi Idrus wrote in a research note.