Economics Essays-Malaysia Economy Exports
Malaysia,the place called‘Truly Asia’.It lies on the Southeastern Asian peninsula bordering Indonesia,Brunei,and the South China Sea.It’s filled with different Asian cultures from Malay,Chinese,Borneo and other indigenous groups.Having no or little issues about societal upheavals,corruptions and such being published in international media,Malaysia continues to be a puzzling country known for its present natural splendor as it continues to flourish as one of Asia’s leading countries.However,knowing its experiences that led to its present growth is what’s really interesting about this country.
After gaining independence from Britain in 1957,it was noted that the Chinese was the chief force in Malaysia’s economy.In the 1960’s,Malaysia’s economy was dependent on exports of agricultural goods.During this period annual Gross Domestic Product increases on an average rate of 6 percent per year.Then in the late 1960’s racial pressure started and caused the creation of the New Economic Policy which aimed to ensure that by 1990’s at least 20%of the economy must be controlled by ethnic Malays.
In the 1970’s,high deflation and mismanagement of government enterprise caused its economy to experience severe economic downturn.By 1985,recession having negative 1.2 percent GDP growth was experienced.As solution to the downfall of the economy,the government shifted its focus from the agriculture sector to the manufacturing sector.It liberalized foreign equity ownership from 10 to 20 percent in order to attract foreign investments.These efforts resulted to a success by achieving a positive GDP growth of 13.4 percent from 1986 to 1990.
Although the country’s internal economic factors continued to be strong,its external economic factors affected it in a negative way.Huge capital outflows from the Malaysian economy and other South East Asian economies were hurt by the Asian crisis.From positive 7.7 percent Malaysia’s real growth rate in declined to negative 7.5 percent in 1998.
Interest rate also increased from five percent to nine percent.Furthermore,inflation and the increase in unemployment from 2.4 percent to 3.2 percent caused poverty to boost from 6.1 percent in 1997 to 7 percent in 1998.In addition,the health sector was also affected due to the increase in the price of imported drugs which in turn also made it harder for the poor to afford medication.
Despite its condition,Malaysia rejected IMF assistance and stabilized its money with the help of Bank Negara Malaysia,its Central Bank,through lowering exchange rates,interest rates,and government spending.Also,the government increased capital controls by halting,several mega projects and established the National Economic Action Council(NEAC).With all these efforts,the country achieved a positive annual growth rate of 5.4 per cent in 1999.
Malaysia's economy continued to surge despite all terrorist threats and health diseases such as the SARS.The Package of New Strategies was established in 2003 to generalize domestic sources of growth,promote private investment and strengthen the country's competitiveness.In 2006,The Ninth Malaysia Plan was issued.
This plan reiterates the target of lifting Malaysia’s economy to"developed nation"by 2020.After knowing all these facts,this paper will now discuss about the economic condition of Malaysia starting from the year 2002 to 2006.It will tackle the GDP’s contribution to growth and growth by sector,lending and inflation rate,money supply,trade and economic indicators and some movements of selected exports.