The effect of macroeconomic factor toward the small and medium enterprises (SMEs) output to the economic growth in Malaysia / Mohamad Hazren Mansur

Small and medium enterprises (SMEs) sectors play an important role to economic growth in Malaysiæ It is substantially contributed to income, employment and output. SMEs are a business that maintains sales, assets or a number of workers below a certain range. The main objectives of SMEs are to reduce unemployment and to increase the income of poor people through SMEs development. Other than that SMEs also generate a purchasing power and help to stabilize the flow of money supply. However, due to the current COVID-19 pandemic, SMEs business has been difficult to survive. People tend to save their money rather than spending thus this will decrease the profit of the business, gross domestic product and import of goods and services. Due to that circumstance, this study aims to investigate the effect of GDP, interest rate, labour force and unemployment rate. To conduct this study, SMEs output is used as a dependent variable, while the gross domestic product, unemployment rate, interest rate, and labour force is used as independent variables. Data are collected from 1987 until 2018 a yearly basis. The Ordinary Least Square (OLS) method is used to test the effect and relationship between the variables. Results from this study shows that SMEs output have a significant relationship with macroeconomic variables.