Report: Daim Zainuddin says finance minister’s prediction of Malaysia’s economic recovery in 2021 ‘premature’

KUALA LUMPUR, June 16 — Tun Daim Zainuddin has suggested over-optimism in Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz’s prediction that the Malaysian economy could start to recover next year.

Daim told The Malaysian Insider (TMI) news portal that it was still too soon for such a declaration given that the world-stopping Covid-19 pandemic has caused an unprecedented global recession.

The former finance minister also cited the country’s past experience with financial crises, during which full recoveries only took place years later.

“It is very premature to claim that we will get out of the woods soon. The contraction of the economy will push back our progress by at least a couple of years.

“We must remember that while GDP (gross domestic product) recovered in 1999 after the (financial crisis) in 1998, it was not until 2002 that the economy went back to the same level prior to the crisis,” Daim said in the interview published today.

Daim also cited other contradictions to the minister’s projection, such as the Malaysian Trades Union Congress’ (MTUC) challenge of the Finance Ministry’s (MoF) claim that 70 per cent of workers have returned to work as unrealistic.

On June 2, it was reported that Tengku Zafrul said that some 10.25 million people or close to 70 per cent of the workforce had returned to work as of May 17, up from 6.64 million people or 43.6 per cent a week earlier.

The MoF also said it expected the Malaysian economy, like others the world over, to contract this year.

The International Monetary Fund (IMF) has predicted that the world economy will shrink by 3 per cent this year due to the Covid-19 pandemic, which has so far killed more than 432,000 people worldwide and infected close to 8 million.

The MTUC and employers associations have predicted that up to two million people could lose their jobs in the impending recession later this year.

Daim, who was finance minister during the 1984-1985 recession when unemployment soared to 9 per cent, went on to call the aftermath of the Covid-19 pandemic as unlike any other in living memory.

“The current crisis is worse than what we have ever experienced, worse than the 2008 global financial crisis, the 1998 Asian financial crisis and the 1930s Great Depression.

“It is also magnified by the US-China trade tensions. At the moment I don’t see an end in sight. That, essentially, is what we are facing now,” Daim said.

Similar assessments have also emerged from authorities such as the Bank of England, which said the economic crisis now was the worst in 300 years.

On May 22, Daim reportedly said that the government must ensure jobs are preserved during the economic downturn due to the Covid-19 pandemic.

The octogenarian noted that the unemployment rate has risen since March and predicted that the situation would become worse.

Yesterday, the Statistics Department released data showing that nearly 800,000 employable Malaysians were jobless in April. 

Daim is known as a close friend and ally of former prime minister Tun Dr Mahathir Mohamad.

He had headed the five-member Council of Eminent Persons (CEP), which served as advisors to the then Pakatan Harapan (PH) government after the coalition took federal power after the 2018 general elections.