In a recent report based on a study on the effects of COVID-19 in Malaysia, it was found that people have become poorer. The COVID-19 pandemic has caused many Malaysians to suffer (which is reflected globally as well) psychologically and more alarmingly, financially.
Middle income becoming low income
It has been estimated that about 20% of Malaysians in the M40 income group (middle-income) has fallen down the ranks to the B40 (low income) group. This was widely due to loss of jobs, salary reductions and such. Companies and businesses had to be closed or downsized after feeling the heat brought about by COVID-19 that caused lockdowns and MCOs (Movement Control Order) instructed by the government.
No signs of positive recovery yet
Those who are now in the B40 would need to get back into the M40 group eventually but it might take longer than expected. Market analysts believe that for such a thing to happen, it would take a strong economic recovery process when those affected get back to the income levels they enjoyed before COVID-19. The government has been implementing several initiatives and financial aids to help them but while they might be helpful in the short-term, the middle-term might not be as positive.
Furthermore, recovery is slow and painful. The World Bank has forecasted a 6% economic growth for Malaysia in 2021 but with the number of new COVID-19 cases spiking, that might no longer be achievable. A third MCO was declared throughout the country in May 2021 and that would dampen any efforts for economic recovery which will surely be pushed back again.
Never-ending cycle in view
The reality is that for the economy to grow and stay positive, people need to spend but with jobs and salary cuts, Malaysians are spending less. With no inter-state traveling, the tourism industry has been badly hit as well. Hence, there really isn’t any immediate economic recovery in sight what more a strong one. All the industries have to recover from the pandemic as people need to start getting back on their feet but the stop-go process is surely stopping them from doing so which means those who fall to the B40 group would take a while before getting back to the M40 segment.