Surge of virus cases poses more risk to economy than seasonal flooding
KUALA LUMPUR: The impact of the seasonal flooding in the country on the economy during the recovery period of the Covid-19 pandemic is expected to be minimal.
Sunway University Business School economics professor Dr Yeah Kim Leng said this was on the condition the seasonal flooding did not affect major industrial and population centres.
"At this point, rather than floods, it is the possible surge of new Covid-19 infections from any subsequent wave that could pose a risk to the economy," he told the New Straits Times.
Yeah was asked to comment on the impact of natural disasters, such as floods, on the economy post-Covid-19.
Following the outbreak of the coronavirus and the implementation of the Movement Control Order (MCO) on March 18, the economy took a beating across a wide range of sectors.
Malaysia recently entered the Recovery Movement Control Order (RMCO) phase that is expected to last until Aug 31, which saw previous measures imposed during the MCO gradually relaxed.
Asked on the impact of ongoing flooding in China to Malaysia's recovering economy, Yeah said Malaysia's total exports contracted by 9.7 per cent in the first five months of this year, compared with the same period last year.
"Our exports to China rose by 1.1 per cent to RM54.7 billion.
"Consequently, China accounted for 14.9 per cent of Malaysia's total exports, up from 14.2 per cent last year.
"With China's quicker recovery from the Covid-19 pandemic, it will be to Malaysia's benefit if its growth can be sustained although the recent massive floods, if prolonged, may stall the recovery process."
Recently, it was reported that authorities in central China had issued the highest-possible flood alert following continuous torrential rain that could lead to overflowing rivers and pose a threat to people's livelihood.
Weeks of flooding in some parts of the country have displaced 24 million people.
Economic analyst Associate Professor Dr Aimi Zulhazmi Abdul Rashid said present economic challenges were a mighty task for many countries.
"A major natural disaster like floods is the last thing we need," he said, adding that Malaysia and China were part of the global supply chain and both countries were still recovering from Covid-19.
"Floods will certainly cause disruption (to the supply chain), affecting the flow of demand and supply of goods between Malaysia and China.
"Since we rely heavily on the global market and China being one of our key trading partners, any disruptions to this process will directly affect our economy," he said.
China is Malaysia's largest trading partner for 11 consecutive years, with bilateral trade last year recorded at RM503 billion and RM443 billion in 2018.
Dr Aimi said the semiconductor sector, being the country's biggest contributor to the global supply chain, along with the manufacturing sector, was likely to suffer the most as a result of natural disasters.
The manufacturing sector focusing on personal protective equipment and medical equipment, he added, would be spared due to stable demand.
As a result of these factors, it could see Malaysia relying heavily on measures to stimulate the domestic economy, he said.
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