Covid-19 really hit a big impact on our economic either locally or globally.

Following
the Covid-19 pandemic, our country’s gross domestic product been drop between 0.8% to
1.2% which is about RM 10.8 billion to RM 17.3 billion said by Tan Sri Muhyidin Yassin,
the prime minister. In order to come up with a solution, everything must be researched
especially in the four major sectors of Malaysian economy.

Figure 1: Economy Cycle

Figure 1 shows the economic cycle practiced in Malaysia. There are 4 main sectors
such as foreign sector, business sector, government sector and household sector. These
sectors play their respective roles, but they are interrelated, leading to economic cycles. In
this pandemic situation, we find that the foreign sector is deeply affected by the collapse of
tourism and hospitality industry. All countries have used closed doors to reduce the spread of
the virus. Each country also reduces import activities to cover domestic spending. Through
this sector, Malaysia depends only on rising oil prices as Malaysia is one of the major oil
exporting countries. The rise in oil prices will help boost the country’s revenue.
However, the country cannot rely on the foreign sector alone as other sectors are also
affected by the Restrict Movement Order (RMO). Due to RMO, our internal economy seems
to go down and slow. The government is trying to save the business sector and the household
sector. Among the actions taken by the government is giving subsidy by imposing tax and
debt exemptions during this pandemic period to avoid bankruptcy business companies and
reducing output cost.
The government also spends as much on household sector. These expenditures can be
seen through the Government’s Economic Stimulus Package which is to protect the welfare
of citizen and helping those who are really affected by RMO especially the SMEs. Among
the packages implemented were RM500 assistance to hawkers and RM200 to students.
As we can see from the cycle, when the government sectors inject into the household
sector, the household can do saving or had consumption expenditure. Pandemic situation
made the households are more likely to save money for their emergencies or to face possible
economic downturn. Their expenses will also be for basic needs so that they can survive
during RMO. Furthermore, the subsidies that government give to business sector will reduce
the unemployment rate as the sector will give income payments to household which it is
important for them when their jobs are secured even in this situation and provide purchases
that government needs such as equipment for frontlines. For savings, capital market will try
to use the money flow in investment on business and government sector to help solve the
Covid-19 crisis.