Its economist, Sonia Zhu, noted that Malaysia’s economy contracted by 0.5% year-on-year in the first quarter of 2021, following a 3.4% slump in the fourth quarter of last year.

“Despite a gradual easing of gross domestic product (GDP) contractions, conditions will likely stay weak in the coming quarter due to the latest movement control order (MCO),” she said in a statement today.

Zhu said prolonged lockdowns will be “tricky” to manage, especially for daily wage earners, small businesses and families financially impacted by each MCO.

“Social events, indoor dining and travel are prohibited during the MCO, hurting service industries such as food, retail and hospitality. Household spending will dwindle during a time when it is normally expected to peak,” she said.

Hence, a stronger push towards wider vaccination is key, she said, adding that at present, only 3.4% of Malaysia’s total population has received at least one dose of a vaccine.

She said the slow vaccination rate has cast doubt on the ability to reach herd immunity target by the end of 2021, “tilting the balance of risks to the downside for the subsequent quarter”.

Earlier this week, Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus said Malaysia remains on track to achieve GDP growth of between 6% and 7.5% this year.