Economics Essay

Introduction: During the past three years , the world has been going through a
global crisis due to the covid-19 pandemic (Corona) .Ever since, the world’s
economy, agriculture, manufacturing, etc. Have all suffered .According to the
IMF the global growth rate in the world’s economy has decreased by -4.9 %,
which equals1.9% points below the April 2020 World economic outlook (WEO)
forecast (IMF , 2020) .One of the most affected countries from this crisis was
Malaysia , From an economy that was primarily centered on agriculture and
commodities in the 1960s to one that now includes manufactures and other
services , Malaysia has effectively expanded. The government's intention is now
on improving the well-being of the poorest 40% of the current population, with
lower than 1% of Malaysian citizens experiencing a higher poverty level (The
world bank in Malaysia, 2021).Malaysia has tremendously affected its economy
from one that was primarily based agriculture commodities to one that now has
thrived manufacturing and service sectors , which have helped the nation to grow
more into a major exporter of electrical appliances , components and parts .since
it has gained its independence in 1957. With a trade to GDP ratio that has
averaged over 130% since 2010, Malaysia is among the nations with the most
open economies in the world. The rise of revenue and the creation of jobs have
been greatly aided by trade and investment openness, with about 40% of jobs in
Malaysia being related to export activity. After the 1997 Asian financial crisis,
Malaysia's economy has been growing at an average rate of 5.4% since 2010,
and by 2024, it is anticipated to have made the transition from an upper middle-
income economy to a high-income economy ( The world bank in Malaysia, 2021).
Covid 19 and its impact on Malaysia: On January 12, 2020, the World Health
Organization acknowledged the existence of coronavirus disease 2019 (COVID-
19), a brand-new respiratory illness that had its origins in Wuhan and then
spread globally. The COVID-19 epidemic has had a significant impact on
Malaysia. Although a local outbreak didn't start until March 2020, Malaysia saw
its first COVID case in early February 2020. The majority of limitations on
domestic activity and mobility were lifted beginning on May 4, 2020, and were
then further removed on June 10, 2020, as part of the Recovery Movement the
previous table as of April 11, 2020, shows the top 11 nations with the most
COVID-19 cases(shah, 2020)
No. Country Total cases Total deaths Total recovered
1 USA 502,876 80,747 27,340
2 Spain 158,273 16,081 55,668
3 Italy 147,577 18,849 30,455
4 Germany 122,171 2736 43,913
5 France 124,869 13,195 24,932
6 China 82,003 3342 77,525
7 Iran 68,192 4232 35,465
8 UK 73,758 8958 344
9 Turkey 47,209 1006 2423
10 Belgium 26,667 3019 5568
34 Malaysia 4346 70 1830
The Malaysian initial outbreak wave has started from the 25 th of January to the
15th of February as they have discovered having 22 cases .On the 25 th of January
2020 they have identified three imported cases of covid 19 in Malaysia . While
the government have suspected some infections discovered from outside
Malaysia that are later referred to being imported cases , taking the travel history
of the specific patient into consideration. While on the second wave they have
found 5,945 cases from the phases only between the 27 th of February to the 29th
of April, by the beginning of the 27 th of February and being continued when
people with a history of travelling abroad to places like Japan, Italy , Australia
etc...they began to exhibit the symptoms of the corona . However , the last
phase was the worst that Malaysia has ever experienced. As the third Wave of
Outbreak started from 8th of October and being continued until today ,after the
number of cases dropped to a record low of between one and two digits from
July to September, with the highest number of cases coming from Sabah (8,082),
Selangor (3,357), Kuala Lumpur (2,853), and Kedah (1,940) from the beginning
of September to the 19th of October (The Star, 2020). (29). Sabah, where
numerous substantial clusters of infections have been detected, registered the
highest number of cases that Malaysia has ever been through and still the
struggle is continued .(Hashim, 201)
 Fiscal Policy :
fiscal arrangement, essentially there are two sorts of Fiscal arrangements that regularly
utilized by the government specifically Expansionary and Contractionary. Both are
managing with the adjust between the utilization of two fundamental financial
arrangement devices, the investing apparatus, and the tax collection instrument .
Expansionary financial approach is the foremost well-known sort utilized by the
government. It works through either the government will be investing more or by
diminishing wage through assess cuts, or by the combination of both. The most thought
behind this sort of approach is to guarantee that the buyers have more cash to spend
and thus will make more request that inevitably will lead to the positive financial
development of the nation.

According to IMF latest update on July 2nd, 2021, The following are the main actions taken by
Malaysian Government Under Fiscal policy as they have stated that during the period from
the 27th of February 2020 to the 26th of October 2020 the Malaysian Government
stimulus package of RM 72 billion will be including the following :-

- Increase in health spending.

- Temporary tax and social security relief.
- Cash transfers to affected sectors , households, and low income
- Rural and East Malaysia infrastructure spending.
- Electricity discounts and temporary pay leave
- Wage subsidies to help employers retain workers.
Furthermore, employees will be allowed special withdrawals from their
Employment Provident Fund (EPF) account for a 12-month period and
businesses will be allowed to reschedule their EPF payments.

 On November 6, the authorities released that the 2021 budget, which included RM 17 billion
spent on COVID-related measures that was carried over from the packages announced earlier in
2020.
 While From 18th of January 2021 to 31st of May 2021, the authorities announced set of
packages, totaling RM 75 billion with key initiatives that includes the following:
- Accelerated social security payments under the existing programs.
- Accelerated withdrawals from the EPF.
- Extended tax relief on communication equipment and locally produced cars.
- Expansion of the wage subsidy program, and Additional grants for
microenterprises.
- It also includes relaxation of the unemployment benefits eligibility criteria and
extension of terms.
- Additional funds for procurement of vaccines .
- Additional cash payments to the vulnerable.
- Extension of targeted wage subsidies and grants.
- Increase in small-scale infrastructure projects, and
- Fuel subsidies.
The package also includes measures to extend financing for firms and improve
digitalization of the economy.
Monetary policy
A nation's monetary policy, which controls the quantity of money flowing through the economy,
is a significant factor.(Peek, 2022) And Malaysia have used the monetary policy in order to
balance its economy during the pandemic as in the BNM , the central Bank of Malaysia figured
out a way to sort those problems and has taken the following actions :-

- Malaysia has lowered the Overnight Policy Rate (OPR) in 3 consecutive MPC meetings
on March 3, May 5, and July 7. The policy response was initially geared to address
market disruptions and financial market volatility in March, and most recently was
responding more to weak global economic conditions and subdued inflationary
pressures.
- lowered the Statutory Reserve Requirement (SRR) Ratio by 100 basis points to 2 percent
effective on March 20.
- They have increased its Financing Facilities by RM4 bn to RM13.1 bn (0.9 percent of
GDP).
- They Announced temporary easing of regulatory and supervisory compliance on banks
to help support loan deferment and restructuring.
- They also Announced relief measures for insurance policy holders and takaful
participants.
- The authorities have announced measures to help business financing by both the
private sector and public banks worth about RM 6 bn (0.4 percent of GDP).

On April 16, SC announced regulatory relief measures for public listed companies.
As they Announced measures to enhance protection of distressed companies against
liquidation in order To support the real estate sector, the Home Ownership Campaign
was re-launched in June 2020, with stamp duty exemptions for properties between
RM300,000 to RM 2.5 million until May 31, 2021; the Loan-to-Value requirement of 70
percent for third mortgages has been lifted until May 31, 2021; and Real Property Gains
Tax exemption for disposal of residential homes until December 31, 2021.On the other
hand, Individuals who have lost their jobs in 2020 and have yet to find a job will be
offered an extension of the loan moratorium for a further three months by their bank.
While Individuals who are still in employment but whose salaries have been affected
due to COVID-19 will be offered a reduction in loan installment in proportion to their
salary reduction, depending on the type of financing. As well as Banks will be offering
the flexibility for a period of at least six months. In addition, banks have also committed
to provide repayment flexibility (e.g., allowing temporary interest-only payments and
lengthening the repayment period) to other individuals and all SME borrowers affected
by COVID-19. The flexibility offered by each bank will consider the specific circumstances
of borrowers.
.
 Conclusion:
Although covid-19 was a worldwide epidemic and was one of the worst health
crises that the world has ever faced. Malaysia was a severely affected victim
from this crisis at first as Malaysia confronts increasing difficulties in reacting to
this pandemic problem ,because Malaysia is on its way on being a developing
nation with extremely limited resources. So, this essay has simply illustrated the
impact of covid-19 epidemic on the Malaysian economy and the country itself
and how it got affected . Malaysia decided to take some actions against this
epidemic and with both short- and long-term actions they have taken regarding
the impact of policy outcomes as many of the Malaysian citizens have also been
pushed under the poverty level due to the lack of sources of income as a result of
the slowdown in all the domestic businesses. Not only this but also, how the
significant declines in the number of imports and exports were obvious, the
Malaysian government tried everything in their power to provide the nations with
what would fulfill their needs until they recover from this crisis.
Nevertheless ,Malaysia was one of the fastest recovering countries globally, as
they renewed their healthy society and environment to be as suitable as possible
to receive and treat the patients wisely and to promote and accomplish the right
to the health department in the country .I have previously discussed the fiscal,
monetary, and economic responses to the covid 19 pandemic crisis as well as
the strategies stated by the Malaysian government to raise money for supporting
required response for the issue as the effects of the Malaysian government
response will be then taken into consideration soon.
References :
IMF , 2020. World economic outlook update, June 2020: A crisis like no other,
an uncertain recovery. IMF. Available at:
https://www.imf.org/en/Publications/WEO/Issues/2020/06/24/WEOUpdateJune20
20#:~:text=Global%20growth%20is%20projected%20at
%20%E2%80%934.9%20percent%20in,projected%20to%20be%20more
%20gradual%20than%20previously%20forecast

World bank in Malaysia, 2021. Overview. World Bank. Available at:

https://www.worldbank.org/en/country/malaysia/overview

Shah, A.U.M. et al., 2020. Covid-19 outbreak in Malaysia: Actions taken by the
Malaysian government. International Journal of Infectious Diseases. Available at:
https://www.sciencedirect.com/science/article/pii/S1201971220304008

IMF, 2021. Policy responses to covid19. IMF. Available at:

https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19

Peek, S., 2022. Monetary policy definition. Business News Daily. Available at:
https://www.businessnewsdaily.com/15530-what-is-monetary-policy.html

Hashim, J.H. et al., 2021. Covid-19 epidemic in Malaysia: Epidemic progression,

challenges, and response. Frontiers in public health. Available at:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8138565/