The economy is not just a symbol of money and wealth. For the citizens, the economy may be just prices, wages, and consumption levels. Still, for a country, it can guarantee the sovereignty and territorial integrity of the country, it can improve the standard of living of the citizens, so the country’s economy is related to all citizens. The economy is a double-edged sword. It has both good and bad sides. However, the economy is also a popular type of discipline. It contains human clothing, food and housing. However, coronavirus disease 2019 (COVID-19) pandemic has impacted the global economy.
We are aware that the economic situation in Malaysia is not good through the report, as the gross domestic product of Malaysia grew by 0.7% in the first quarter of 2020 from the National Bank of Malaysia’s year-earlier report. Since the third quarter of 2009, this is the lowest single quarter growth rate in Malaysia.
To date, COVID-19 has had a severe damaging effect on Malaysia economics. There are two primary sources of economic damage in Malaysia, the first is an international reaction, and the second is a movement control measures.
First, long before Malaysia took part in the blockade, the outbreak of the new coronavirus in China caused a wide range of supply and demand shocks and caused global repercussions. With the collapse of Chinese demand, commodity exporters worldwide are under pressure to lower prices, and manufacturers around the world are facing production cuts as Chinese factories are closed.
In Malaysia, the impact of these Chinese shocks can be terrible. The Malaysian economy is one of the most affected economies in the region by Chinese demand and supply. China is Malaysia’s largest trading partner, a significant source of foreign investment, and a significant source of tourism outside ASEAN.
In addition, over the past decade, the Malaysian company has become one of the most integrated companies in the global production network. The situation is compounded by the fact that regional supply chains are increasingly China-centric. Indeed, more than a quarter of Malaysia’s trade with China consists of intermediate components, which are the products most affected by global supply chain disruptions. Second, while MCO also leads to catastrophic economic losses.
Besides, the closure of companies and services, as well as travel and travel controls, will have a huge impact on private consumption and corporate investment. Its adverse impact on individual livelihoods and businesses will be even more harmful. Individuals and businesses affected by the temporary closure face a high risk of facing direct cash flow restrictions due to reduced income. Small and
medium-sized enterprises, low-income people, and unemployed workers will feel this liquidity crunch. This could have a ripple effect on the economy as a whole-leading to the insolvency of businesses, bankruptcy of individuals, and the financial system burdened with non-performing loans.