Post-COVID economic resilience: Exploring the role of inflation targeting and small-scale enterprises (SME) vulnerability

Abstract

This study investigates the interplay between inflation targeting, economic stability, and the delayed recovery of micro and Small-Scale Enterprises (SMEs) in the context of a highly uncertain global financial environment, with a specific focus on the impact of the COVID-19 pandemic. The research surveyed SMEs in Malacca, Malaysia, using a stratified sampling technique. Findings reveal that SMEs were significantly affected by the pandemic, particularly in areas of financial capacity and human resource availability. Furthermore, a strong and positive correlation was found between limited access to financial sources, labor shortages, and delays in SME recovery. These micro-level disruptions are examined in relation to broader macroeconomic challenges, including inflation, volatility, and monetary policy responses. The study argues that while inflation targeting remains a vital tool for macroeconomic stability, its effectiveness in supporting SME recovery depends on complementary fiscal and structural measures that address ground-level economic vulnerabilities. The findings highlight the need for integrated policy frameworks that align inflation control with inclusive recovery strategies in post-crisis environments.