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UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the decision by the government to start relaxing the lockdown measures this month.

Key Quotes

“The government announced that the Movement Control Order (MCO) that has been in place for almost two months will be eased from 4 May. The relaxation will allow most businesses and social sectors to reopen starting this week albeit under new guidelines of a conditional MCO.”

“The conditional MCO includes precautionary safety measures and strict operating procedures at work and public places. However nine states said that they will not be following the move.”

“Given signs that the COVID-19 curve has flattened in Malaysia, the government is now moving towards flattening the recession curve amid mounting losses from the MCO. Cumulative losses of MCO to date amounted to MYR63bn, or 4.2% of GDP. Although the fiscal package of MYR260bn could add 2.8% pts to GDP, we still expect a sharp double-digit GDP decline in 2Q. We expect BNM to cut the policy rate by 50bps to 2.00% tomorrow (5 May).”