Malaysia announced a 14-day total lockdown (from 1st – 14th June) with all non-essential services and economic sectors prohibited to operate and restricted social mobility. The decision to impose a total lockdown comes as Malaysia’s confirmed daily infections have continuously surged to new record highs since 25th May to above 9k on 29th May while reported deaths also shot up.
The government is allowing a total of 35 essential services and manufacturing sectors to operate including banks, healthcare, transportation, communication, e-commerce, food and beverage (for delivery), hotels for quarantine purposes only, construction and critical infrastructure works. Key export-related sectors including electrical and electronics, medical equipment, rubber products, chemicals, and oil and gas, are allowed to operate albeit with 60% workforce capacity.
UOB has shaven 1% off its GDP forecast to 4% for 2021 (vs. 5% previously) with the latest measures. This assumes 55% – 65% of the economy continues to operate under the first phase, gradually re-opening in the second phase, and allowing almost all sectors to operate by 3Q21 as vaccination rates accelerate, while additional fiscal support helps to cushion the effects. The 2021 targeted fiscal deficit is expected to rise above 6% of GDP. Bank Negara Malaysia (BNM) is expected to monitor the fluid situation leading up to the next policy meeting on 8th July.