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There are a few countries that produce petroleum in this world, but not all of these countries have consumer petroleum subsidies, the countries such as US, Europe, Norway and so on. Each of the country have varies subsidies for consumer price of petroleum product.
In Malaysia, weekly fuel price adjustment under managed float system will no longer to be used. They use the Automatic Pricing Mechanism to stabilize the price of petrol in the country to a certain extend in 1983. Furthermore, some of the governments want to reduce the petrol subsidy because it is a government’s expenditure in order to make government’s balance sheet more favorable. It might depend on the extent of the subsidy help to reduce deficit spending or reduce the debt of Malaysia. However, consumers will feel angry if there is a reduction of the petrol subsidies due to it is other income of the consumers.
The reduction of petrol subsidies will affect the consumption, the reducing of petrol subsidy lead to the decreasing in consumption. Moreover, for those non petroleum business would bear the increased cost and earned less profit. It would also increase the exports and decrease the expense of importing refined petroleum. GDP is the total up of consumption, investment, government and net export, therefore, the decreasing in consumption will also decrease the GDP, due to the increasing in export and decreasing in import expenses, the GDP will not be affected.

Post Author: admin