70,000 jobs created for every 1% GDP growth

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Kuala Lumpur, 10 February 2021 – Malaysia’s economy can create about 70,000 jobs for every 1% increase in its Gross Domestic Product (GDP) growth, the Malaysian Institute of Economic Research (MIER) said, reported Bernama.

In its latest National Economic Outlook 2020-2021 update, MIER said the new jobs are expected to be created primarily in new agricultural and industrial sectors, as well as in new services through digitalisation.

“The unemployment rates can be further reduced if the new graduates and school leavers entering the labour market this year are given short training for upskilling,” it said on February 4.

It said the country’s unemployment rate rose by a marginal 0.1% point month-on-month to 4.8% in November 2020, with 764,400 unemployed persons. The think tank said a main concern in the recovery path would be job creation, adding that it expected the real economic recovery to start in the second quarter of this year.

“The governments’ successful rollout of the national vaccination starting from February is imperative if we are to achieve this,” it said.

MIER said it is also maintaining its real GDP growth forecast of 5.2-6.7% for 2021, taking into account projections from MIER’s Crouching Tiger Initiative and the launch of the 12th Malaysia Plan this year.

The Crouching Tiger Initiative aims to help Malaysia increase productivity and wages via the use of technology, bringing the country out of its middle-income trap and transforming it into a high-wage economy to become the fifth Asian tiger.

However, MIER noted that the COVID-19 pandemic remains a major downside in the speed of economic recovery in 2021, following the current third wave of infections and the virus’ mutation into new variants.

The think tank said the flattening of the third wave of COVID-19 transmissions is expected to take more than six to eleven months compared to six months in the first wave, adding that the PERMAI stimulus package only has a “marginal to neutral” effect on the economy.

It said mitigating the transmissions requires tighter and stricter lockdown and Standard Operating Procedure measures, including comprehensive testing, especially in factories and construction sites; extensive contact tracing; and an accelerated vaccination programme.

“But a full economic lockdown should be avoided due to its potentially disastrous effect on the economic recovery that has just begun.

“For longer-term measures, public spending in infrastructure, health, education and housing; programmes to revive the small and medium enterprise sector affected by the pandemic; as well as new incentives to encourage investments in the private sector from domestic and foreign sources are the order of the day,” it added.

-Money Compass