According to its “Malaysia Economic Monitor: Weathering the Surge” report launched today, the recent spike in infections has raised concerns about the overall capacity of the health system and the effects of the cycle of opening and closing the economy on households and firms.

World Bank Group senior economist for macroeconomics, trade and investment Shakira Teh Sharifuddin said the ongoing pandemic and movement restrictions would have an impact on Malaysia’s economy in the near term.

“In the short term, the focus is on containing the pandemic and saving lives as well as livelihoods.

“Over the medium term, it is important to take the lesson learned from the pandemic and undertake strong measures such as rebuilding fiscal buffers and strengthening the social protection system,” she told a virtual media conference after the launch of “Malaysia Economic Monitor – June 2021 Edition”.

According to the report, Malaysia’s immediate priority must be on the efficient and sustained management of the ongoing pandemic and its effects on individuals, households and firms.

An effective find-test-trace-isolate-support strategy is essential to ensure a safe and gradual reopening of the economy and an easing of movement restrictions, the report said.

It added that protecting the lives and health of citizens — and thereby preventing further strains on the country’s health system — is vital to ensure a safe resumption of economic activities and prevention of a more protracted economic downturn.

Meanwhile, World Bank Group senior economist on finance, competitiveness and innovation Smita Kuriakose called for deep structural reforms in the medium to long term to ensure resilient post-pandemic recovery, led by the private sector.

She said Malaysian businesses are more vulnerable currently with less cash flow to withstand the health crisis.

With the country’s fiscal challenges and scarce public resources, there is a need for efficient reallocation of economic resources where they can create the most value, she added.