The Relationship between COVID-19 and Economic Growth in Malaysia

King, Hui En (2023) The Relationship between COVID-19 and Economic Growth in Malaysia. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

Infectious diseases are one of the major causes of death responsible for the quarter to one-third of the mortality worldwide. Despite major developments in the pharmaceutical industry, the spread of infectious diseases is rising due to globalization, increased travel and trade, urbanization, populated cities change in human behavior, reviving pathogens and improper use of antibiotics. The recent virus outbreak COVID-19 shows that infectious diseases spread easily due to open economies and easily threaten nations’ economic stability. Based on the past researches where most of them state that COVID-19 do contribute to economic growth of a country. This paper attempts to examine the relationship between COVID-19 and economic growth in Malaysia. There are two specific objectives of the study which are to examine the causal relationship between the COVID-19 and economic growth in Malaysia and to examine the short-run and long-run relationship between private consumption, fixed investment, exchange rate, COVID-19 and economic growth in Malaysia. Autoregressive distributed lag (ARDL) test is used in this study to test the cointegration and an error correction model based on ARDL approach using time series data for the period of 2010 quarter 1 to 2021 quarter 3 in case of Malaysia. This paper reveals the bilateral causal relationship between COVID-19 and economic growth in Malaysia. The finding also shows that exchange rate and COVID-19 are also the significance factor that can influence economic growth in Malaysia in the long run and short run. Moreover, the result showed that there are positive short-run relationships between private consumption and economic growth in this research. Besides, the fixed investment has also showed insignificant in affecting economic growth in the long-run and also short-run. This study concluded that the COVID-19 is the important significant factor to affect economic growth in Malaysia