Economist weighs in on economic impact of lockdown
KUALA LUMPUR: Any impact on the nation’s economy if the government imposes a lockdown in view of the Covid-19 spread will depend on how extensive it is and the period concerned.
Economist Dr Yeah Kim Leng said it was inevitable for large social, political, religious and commercial gatherings and celebrations to be banned in an effort to combat the spread of the infection.
”The economic impact will depend on what activities are curtailed, how extensive and how long is the lockdown period.
“The economic consequences we will experience will be reductions in consumer and business spending.
“If prolonged, the shutdowns will lead to business failures and layoffs, exacerbating the economic downturn,” said Dr Yeah, who is an economics professor at the Sunway Universiti Business School.
He was asked to comment on calls among some segments in the community and the medical fraternity urging the government to declare a lockdown to contain the pandemic.
The calls were triggered by the spike in new confirmed Covid-19 cases as announced by Health Minister Datuk Seri Dr Adham Baba yesterday.
If the lockdown was extended to business premises, workplaces, factories and production facilities, Yeah said the economic impact would be more severe as there would be production and income losses.
“Retail, hotels, restaurants, transport and tourism-related industries will be most affected as people will be required to stay indoors,” he said.
He noted that concerns over the severity of Covid-19's economic impact had triggered policy responses, including the just announced 100 basis points cut by the United States Federal Reserve and rolling out of fiscal stimulus packages in affected nations across the world.
It was reported that six individuals believed to be persons in the medical fraternity had called on the government to impose a lockdown.
In a joint statement, the group said they believe that if a lockdown were imposed, carriers of the virus could be easily isolated and identified, and this would help minimise the spread.
“The advice for social distancing has obviously fallen on deaf ears, as I see people going about their daily lives as if there is no threat at all.
“I do consider the implication of such measures, but we do not want to be too late, like other countries, which are fighting a losing battle now. Every day matters,” said the joint statement addressed to Health director-general Datuk Dr Noor Hisham Abdullah.
“If a lockdown is imposed, the many carriers in the community now will surface when they develop symptoms, while at the same time, they do not infect others.
“I understand the impact on social order and the economy (this would entail) but if it blows out, we will be dealing with a worse outcome,” the statement read.
This article first appeared in New Straits Times on 16 March 2020.