REASSESSING POVERTY INCIDENCE BROUGHT BY THE COVID-19 PANDEMIC IN MALAYSIA
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Abstract
The COVID-19 pandemic has caused health-economic related shocks that compounded the Malaysian population’s vulnerability to poverty. It has put in the spotlight the economics of poverty, fragility of the social safety net, and has also disproportionally increased the risks of poverty among the population in the country. Malaysia has recorded higher overall poverty rates during the pandemic compared to the post Asian Financial Crisis in 1998-2002. This abrupt episode has adversely impacted the gains made by the country within the realm of poverty reduction, where the downtrend of the incidence of poverty over the past five decades will be difficult to maintain. This prompted the question of ‘how have the prolonged pandemic and its unprecedented economic impacts reverses the decreasing trend of poverty?’ It aims to forecast the incidence of absolute poverty as the result of the pandemic, represented by the number of households at risk of falling into poverty from 2021-2025. A baseline trend of published poverty statistics from 1970-2020 was used to produce the estimation. A quantitative forecasting using time series models – Autoregressive Integrated Moving Average and Linear Exponential Smoothing – is leveraged to estimate the future poverty trends. The results suggest an increase in poverty incidence between 6.4% to 8.4% from 2021-2025. This effectively yields a jump in the number of poor households by 670,000 come 2025. The implication of the study is that it provides some measure of the increase of poverty estimates in light of the prolonged pandemic. This insight will prove to be practical to policymakers involved in orchestrating the COVID-19 economic recovery of Malaysia.
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