KUALA LUMPUR: Political uncertainty that had wreaked havoc in the country over the weekend has now calmed down after Tun Dr Mahathir Mohamad was appointed as the interim Prime Minister yesterday.

However, with the ongoing political situation, businesses are concerned if the stimulus package which is expected to be announced on Thursday (Feb 27) would hit the stop button as well.

An analyst said that the package, which would boost the local economy amid the global economic slowdown due to COVID-19, is much needed at this time.

"We believe that the details of the stimulus package had been ironed out before the political havoc took place. From the economic perspective, we believe that Dr Mahathir knows the importance of the package to boost the economy.

"However, with everything taking place, we would expect a slight delay in the announcement," he said.

Meanwhile, Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the economic stimulus package must take place due to heightened economic uncertainties, which have seen expenditure from businesses and consumers decline.

"This will have an impact on the aggregate demand which if left unattended would perpetuate the economic slowdown," he said.

On fiscal stimulus, he said that so far Bank Negara Malaysia has played its role by cutting the interest rate in January and perhaps implement another round of overnight policy rate (OPR) cut in March or May.

"I believe that with the current step taken by the central bank, it would complement the efforts to resuscitate the economic growth going forward," he said.

Last month, Bank Negara Malaysia unexpectedly cut the OPR by 25 basis points to 2.75 per cent, the lowest since March 2011, and said there is still room for another cut to boost economic growth.

Since COVID-19 hit our shores in mid-January, the Bursa Malaysia key index the FBM KLCI has seen a decline of 57 points to 1,531.20, with sectors such as manufacturing, tourism, and logistics expected to experience losses.

As political uncertainty abates and optimism returns, the benchmark FBM KLCI was 10.67 points higher at 1,500.73 at lunch break, after declining 2.68 per cent or 41.14 points to 1490.06 points yesterday.

Malaysia is not the only ASEAN nation planning for a stimulus package to address the COVID-19 crisis. Thailand is proposing a new economic stimulus package to the cabinet in mid-March, hoping it will immediately catapult the momentum to boost the economy in April.

The package, to cover tourism, consumption and investment, is aimed at stimulating domestic travel, which is suffering from the COVID-19 outbreak.

Indonesia through its central bank, Bank Indonesia (BI), decided on Thursday to cut its benchmark interest rate to help mitigate the potential impacts of the coronavirus outbreak on the country's economic growth.

During a two-day board of governors meeting, the central bank decided to slash its benchmark interest rate, the BI seven-day reverse repo rate, by 25 basis points to 4.75 per cent after holding the rate last month. 

 - Bernama