Stimulus: an economic cure for Malaysia’s coronavirus woes as China losses mount?

Measures to boost tourism, retail and aviation follow warnings that country may miss its annual growth target

Close ties to China have made Malaysia particularly vulnerable to the impact of the coronavirus

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A visitor to the Batu Caves in Kuala Lumpur, Malaysia. Photo: Reuters

Published: 9:00am, 24 Feb 2020Updated: 3:42pm, 19 Mar 2020

As fears over the coronavirus continue to spread across the globe, Malaysia is to launch a stimulus package aimed at softening the impact on its domestic economy.

The package, to be officially announced on February 27, will focus mainly on the tourism, retail and aviation sectors, although construction and manufacturing are also likely to receive a boost.

Finance Minister Lim Guan Eng said on Thursday Malaysia would become one of the first countries to take such measures. His remark came just weeks after the central bank warned that Malaysia’s first-quarter growth would be hit by the outbreak and the World Bank suggested the country might need to revise its annual growth target of 4.8 per cent.

Economists broadly welcomed the move, saying stretching the nation’s fiscal deficit was a fair short-term measure to overcome the external shock, but warned that it needed to be executed carefully.

The nation’s close ties to China make it particularly vulnerable to the impact of the coronavirus, particularly as Chinese travellers represent its biggest tourist market. Tourism campaigns had previously been referring to 2020 as the Malaysia-China Year of Culture & Tourism and Visit Malaysia Year.

A woman wearing a protective face mask crosses a bridge in Kuala Lumpur, Malaysia. Photo: Reuters