Malaysia announces economic package to blunt coronavirus hit

[KUALA LUMPUR] Malaysia, in the grip of a political leadership battle, announced a package of measures worth 20 billion ringgit (S$6.6 billion) to boost an economy battered by the coronavirus outbreak.

Interim Prime Minister Mahathir Mohamad said Thursday the government will support businesses affected by the virus, particularly in the tourism industry.

The fallout from the virus, which is wreaking havoc on mobility and supply chains across Asia, will further weigh on Malaysia's growth, which slowed to its weakest pace since 2009 in the final quarter of last year. The government already has widened its fiscal deficit target for 2020, to 3.2 per cent of gross domestic product from 3 per cent previously, giving it space to support growth.

Malaysia's announcement Thursday follows fiscal steps taken in recent weeks by Indonesia, Singapore and Hong Kong to counter the economic impact of the virus. Indonesia said this week it will give incentives and tax breaks to businesses in a package worth US$737 million.

In Malaysia, the outlook is further clouded by political upheaval after Mahathir abruptly resigned as prime minister Monday, only to be reappointed in an interim capacity later the same day but without his Cabinet.

The central bank has already cut its benchmark interest rate once this year, by 25 basis points, and has signaled room for further policy easing. The bank is scheduled to make its next rate decision on March 3.

BLOOMBERG