Business
Economists cut forecasts for Malaysia’s 2021 growth on Covid lockdown
A women is seen in Kuala Lumpur with a Malaysia flag as a background.
SOPA Images | Getty
SINGAPORE — Several economists slashed their 2021 growth forecasts for Malaysia after the country announced stricter measures to contain a recent surge in Covid-19 cases.
The Malaysian government imposed an inter-state travel ban nationwide and a lockdown on six states and territories for two weeks starting Wednesday. The country’s king also declared a state of emergency that will last until Aug. 1, or earlier if Covid cases are effectively lowered.
Here are some economists who have cut their forecasts for Malaysia:
- Capital Economics, a consultancy, said the Southeast Asian country will grow 7% this year — down from its previous projection of 10%;
- Singaporean bank UOB downgraded its forecast from 6% to 5%;
- Japanese bank Mizuho lowered its projection from 6.7% to 5.9%;
- Fitch Solutions revised down its forecast from 11.5% to 10%.
Malaysia was one of the worst-performing economies in Asia last year. The International Monetary Fund in October said the Malaysian economy would shrink 6% in 2020, reversing a growth of 4.3% in the previous year.
Alex Holmes, Asia economist at Capital Economics, said in a Tuesday report that Malaysia’s latest lockdown “is likely to hit the economy hard.” He pointed out that the six states and territories under lockdown — which include capital city Kuala Lumper and Malaysia’s richest state, Selangor — account for 57% of the population and 65% of gross domestic product.
The lockdown — locally referred to as a movement control order, or MCO — includes banning all social gatherings and dine-ins, closing schools and allowing only “essential” businesses to open.
Most of the rest of the country were placed under less stringent measures, with most businesses allowed to operate but activities that involve large gatherings are banned.
Economists from UOB said in a Wednesday report that their growth forecast downgrade assumed that the restrictions are extended for another four weeks until end-February. But the overall economic hit from the latest measures is likely “less severe” compared to last year when the whole country was locked down, added the economists.
‘Blessing in disguise’
The state of emergency declared on Tuesday rocked the country’s stocks and currency.
But the move will remove near-term political uncertainty that the country has struggled with in the past year — and that could be “a blessing in disguise” for the Malaysian ringgit, said Lavanya Venkateswaran, market economist at Mizuho.
The currency slipped 0.5% against the U.S. dollar in a knee-jerk reaction to the state of emergency announcement on Tuesday, but has since strengthened against the greenback and more than recouped those losses.
Malaysia’s Prime Minister Muhyiddin Yassin said there won’t be a curfew under the state of emergency, and the government and judiciary system will continue to function. But parliament will be suspended and elections cannot be held, he said.
Muhyiddin came to power in March last year and has been facing increasing calls from within his ruling coalition to step down and make way for a snap election.
The emergency declaration “removes unnecessary, and self-inflicted political uncertainty that could compromise the policy response to COVID resurgence,” said Venkateswaran wrote in a Tuesday report.
“Instead, a steady policy platform to decisively tackle (the) pandemic with urgency is ultimately a positive for getting the economy back on track,” she said.
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Four major firms signed a letter of intent Friday to develop a “mega-electrolyser” in the German city of Hamburg that would produce so-called “green” hydrogen.
An announcement from the city’s press service said the prospective 100 megawatt (MW) facility would be located on the site of the Moorburg coal-fired power plant, which is currently in the process of being shut down.
In December 2020, it was announced that Germany’s Federal Network Agency would compensate Vattenfall, which operates the plant and is one of the companies involved in the new plans, for the phase-out of the Moorburg plant.
In addition to Vattenfall, the consortium consists of Shell, Mitsubishi Heavy Industries and municipal heat supplier Wärme Hamburg. If all goes to plan, green hydrogen production could start in 2025.
“In the future, green hydrogen will play a very important role in the energy system and therefore also for us,” Fabian Ziegler, who is the managing director of Shell’s operations in Germany, said in a statement.
Hydrogen can be produced in a number of ways. One includes using electrolysis, with an electric current splitting water into oxygen and hydrogen.
If the electricity used in the process comes from a renewable source such as wind then it’s termed “green” or “renewable” hydrogen. The project slated for Hamburg would produce hydrogen using wind and solar.
The four companies involved will now look to apply for EU funding for their project, with their application set to be submitted in the first quarter of 2021. The plan also underlines a shift in policy inside Germany, which has been reliant on coal as a source of energy for many years.
News of the plans for Hamburg comes at the end of a week in which two other European projects focused on green hydrogen production took shape.
On Monday, it was announced that a subsidiary of German industrial giant Thyssenkrupp had been awarded an engineering contract to carry out the installation of an 88 megawatt water electrolysis plant for Hydro-Québec. The electricity for this project will come from hydropower.
A few days later, on Wednesday, Danish energy firm Orsted said it was pushing ahead with plans to develop a demonstration project which will harness offshore wind energy to produce green hydrogen.
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World Health Organization officials are holding a press conference on Friday to update the public on the coronavirus outbreak that has infected more than 97.6 million people across the world.
Albert Bourla, CEO of Pfizer, which manufactures one of the Covid-19 vaccines that’s been authorized in the U.S. and Europe, is scheduled to join WHO officials at the virtual briefing. Dr. Seth Berkley, CEO of the public-private immunization partnership Gavi, and Henrietta Fore, Executive Director of UNICEF, are also scheduled to join the briefing.
Earlier this week, the WHO’s Director-General Tedros Adhanom Ghebreyesus warned that the world is on the brink of a “catastrophic moral failure” if it doesn’t fairly distribute the available doses of the Covid-19 vaccines across the world. He added that the discovery of several more transmissible strains of the virus in different parts of the world increases the urgency of the vaccine rollout.
“It’s not right that younger, healthier adults in rich countries are vaccinated before health workers and older people in poorer countries,” he said Monday. “There will be enough vaccine for everybody, but right now we must work together as one global family to prioritize [those] most at risk of serious diseases and death in all countries.”
The WHO, in partnership with Gavi and the Coalition for Epidemic Preparedness Innovations, established the COVAX facility last year to ensure equitable vaccine access for every country in the world. It aims deliver 2 billion doses of safe, effective vaccines by the end of 2021.
Read CNBC’s live updates to see the latest news on the Covid-19 outbreak.
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New York Gov. Andrew Cuomo is scheduled to hold a press briefing Friday on the coronavirus pandemic as the state continues to push forward with its vaccination efforts.
On Thursday, the Democratic governor’s office said that vaccine distribution sites have administered 93% of the first Covid-19 vaccine doses they’ve received, and 91% of the first and second doses. Both drugs from Pfizer and Moderna require two doses spread weeks apart.
Cuomo said the state has ramped up how many shots it’s able to give in a day, but now officials are concerned that they’ll run out of shots if the federal government doesn’t send more.
“We are racing to administer the vaccine as quickly as possible while doing everything we can to reduce the infection rate. We’ve made progress on both fronts since the post-holiday surge but there’s a long way to go before we reach the light at the end of the tunnel,” Cuomo said in a statement.
Read CNBC’s live updates to see the latest news on the Covid-19 outbreak.
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