Answer to Question #290366 in Macroeconomics for vena

Question

Malaysia’s gross domestic product (GDP) is expected to grow between 6.5% to 7.5% in 2021. Specifically, the government’s Covid-19 stimulus packages are expected to contribute over four percent (4%) to GDP growth, the rest will be contributed by the 2021 Budget allocation. By taking into account the current economic condition, explain the contribution of the government’s stimulus packages and 2021 Budget to the demand for domestic goods.

Answer 1

On April 6, Prime Minister Muhiddin Yasin announced the implementation of a special incentive plan worth $10 billion. Ringgit aimed at small and medium-sized enterprises (SMEs) to mitigate the impact of Action Control Orders (MCO). Muhiddin said that small and medium-sized enterprises and microenterprises make up two-thirds of the country's workforce and provide 40% of the country's economy. This is in addition to other economic stimulus plans that increase cash flow to ensure that the economy does not collapse.

On June 5, the Prime Minister announced a Short-term Economic Recovery Plan (Punjan) to mitigate the effects of the pandemic.

A whole package of measures for restoration was adopted, including Full tax exemption for the purchase of locally assembled cars from June to December 31. This will reduce the price of domestic cars and demand will increase.