KUALA LUMPUR - Reports of a Hermes store in China's affluent Guangzhou raking in US$2.7 million on its reopening day last Saturday have gone viral, fuelling hope that 'revenge spending' to release pent-up demand will also occur in Malaysia once its own restrictions to curb the coronavirus outbreak are lifted and the economy breathes again.. Read more at straitstimes.com.
KUALA LUMPUR - Reports of a Hermes store in China's affluent Guangzhou raking in US$2.7 million on its reopening day last Saturday have gone viral, fuelling hope that"revenge spending" to release pent-up demand will also occur in Malaysia once its own restrictions to curb the coronavirus outbreak are lifted and the economy breathes again.
After deducting non-consumption spending - such as direct taxes, savings and loans - the average drop in spending is still 48 per cent, with the richest 20 per cent cutting down expenses by 59 per cent. But wage cuts, expected drop of investment incomes and record job losses have impacted the finances of more than nine-tenths of private sector workers during the MCO, according to a separate DOSM survey.
This leaves the official expectation that GDP could still grow this year on the back of a 4.2 per cent jump in private consumption looking overly optimistic. Central bank governor Nor Shamsiah Yunos refused to confirm a recession earlier this month, after announcing a projection of -2.0 to 0.5 per cent economic growth.
"The shutdown will have pretty persistent effects," Barclays regional economist Brian Tan told The Straits Times, citing tourism - which provides nearly a quarter of all employment and a value add of over 15 per cent of GDP - as an example of a sector"that's very difficult to come back" from the fallout of a global pandemic as international travel bans will only ease gradually.
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