LETTERS: Lockdown is a non-pharmaceutical approach to curb the Covid-19 virus transmission. We call it the Movement Control Order (MCO), implemented beginning March last year.
The first MCO proved effective when the number of daily cases fell to less than 300 in three months of lockdown. Nevertheless, it led to the contraction of the economic growth in the second quarter of last year by -17.1 per cent and unemployment rates reached 5.1 per cent.
In response to the high economic costs, the government gradually reopened the economy while maintaining standard operating procedure (SOP).
Real recovery should have started this year with the economic growth projected to expand between six and 7.5 per cent. But, the spike of Covid-19 cases halted progress as the government had no option but to implement MCO 2.0 to combat the drastic increase in cases.
This time, it was a more focused MCO to balance the economic costs. As a result, those costs were not as extreme as experienced in the first MCO, as the gross domestic product growth (GDP) only shrunk to -0.5 per cent in the first quarter of this year.
Although MCO 2.0 flattened the infection rate, the presence of highly infectious variants of Covid-19 led to MCO 3.0 in June.
To stabilise the economic costs, the government took a different approach by allowing more sectors to operate along the supply chains and applying head-count instead of capacity measures to restrict operations. The lockdown still impacted the economy, because the MCO 3.0 period was relatively longer.
The GDP growth in the third quarter of this year declined from 16.1 to -4.5 per cent, and small and medium enterprises (SMEs) which employed 70 per cent of the total workers suffered tremendously.
The economy suffered from the “open and close approach”, although the daily losses in each MCO was decreasing as projected by the Finance Ministry (MCO 1.0: RM2.4 billion; MCO 2.0: RM600 million; and MCO 3.0: RM200 million).
The government had to spend an enormous amount on every phase of the MCO to ensure the stabilisation of the economy through a series of stimulus packages with a total value of RM530 billion.
While the economy has shown a sign of rebounding at the moment following the reopening of the economy and the successful vaccination programme, the economy still needs support to spur growth.
The 2022 Budget provided clear directions to the road of economic recovery next year and beyond. IMF and World Bank have forecasted the Malaysian economy to expand by six and five per cent, respectively, next year.
The Finance Ministry is also projecting the unemployment rate to decline and reach four per cent considering the GDP growth is hovering around 5.5 to 6.5 per cent. This projection almost mirrors our estimate of between 4.13 and 4.04 per cent.
Given the considerable efforts put into promoting economic growth and supporting the creation and maintenance of jobs in the 2022 Budget, more unemployed workers are expected to return to formal sectors. Of course, the projection does not take into account the presence of a new lockdown, which may disrupt the recovery process.
Admittedly, the lockdown has a huge impact on the economy, particularly the labour market, although its effectiveness as a non-pharmaceutical measure undeniably helped in curbing the Covid-19 virus transmission.
Alternatively, the healthcare system should be prioritised in terms of facilities, equipment and medical-related staff to ensure our readiness if the situation worsens again.
At the time when the virus still prevails and is mutating into new variants such as Omicron, we might have to think of another non-pharmaceutical containment measure.
