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Coronavirus jolts Malaysia's economy into first contraction since global financial crisis – The Journal Pioneer

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By Joseph Sipalan

KUALA LUMPUR (Reuters) – Malaysia’s economy plunged into its first contraction since the 2009 global financial crisis in the second quarter as the coronavirus pandemic ravaged business activity, prompting the central bank to sharply cut its GDP forecast for this year.

The central bank said on Friday gross domestic product shrank by 17.1% in April-June from the same period a year earlier – its worst slump in over 20 years and a much deeper contraction than the 10% decline forecast in a Reuters poll.

The downturn comes as the government imposed strict curbs on movement and businesses for most of the second quarter to contain the spread of the coronavirus which has infected more than 9,000 people in the Southeast Asian country.

It was Malaysia’s worst economic slump since the Asian financial crisis in 1998 and marked a sharp decline from the 0.7% year-on-year growth seen in the first quarter. Economies have slumped throughout Southeast Asia due to the coronavirus fallout, with Singapore and Philippines both now in recession.

The central bank cut its GDP forecast for this year, expecting the economy to shrink by between 3.5% and 5.5% in 2020. It previously said the economy could contract as much as 2% this year in the worst case scenario.

The data showed a broad-based fall in economic activity, but there were signs of recovery in June especially in the manufacturing and agriculture sectors.

“The extent of GDP decline has improved quite significantly as the economy began to be reopened in May,” said Bank Islam chief economist Mohd Afzanizam Abdul Rashid, predicting a continued recovery.

Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus expected economic activity to gradually pick up in the second half after the government eased its coroanvirus curbs, helped by a global growth recovery and domestic policy support.

The government has rolled out stimulus packages totalling nearly 270 billion ringgit ($64.39 billion) this year to help the public and businesses weather the pandemic..

The BNM have slashed interest rates by 125 basis points to 1.75% so far this year, with analysts expecting at least one more cut in 2020.

“I am cautiously optimistic that the worst is behind us,” said Nor Shamsiah, forecasting 5.5%-8% growth in 2021.

But Nor Shamsiah said there is room for more targeted policy measures in case of a second outbreak.

“This includes our monetary policy, our liquidity measures and financial measures. Likewise, the government will retain some fiscal space to provide stimulus and support for households and businesses if the need arises,” Nor Shamsiah said.

(Reporting by Joseph Sipalan; Editing by Ana Nicolaci da Costa)

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Minimum wage to hire higher-paid temporary foreign workers set to increase

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OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

This report by The Canadian Press was first published Oct. 21, 2024.

— With files from Nojoud Al Mallees

The Canadian Press. All rights reserved.

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PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

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OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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Statistics Canada says levels of food insecurity rose in 2022

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OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

The Canadian Press. All rights reserved.

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