The Policy Responses and Implications of the Global Financial Crisis on Asia: A Case Study for Malaysia

This paper examines the impact of the 2008 Global Financial Crisis (GFC) on Malaysia's economy as well as challenges and responses of the government in countering this crisis. It argues that the impact of the GFC is different from the 1997 Asian Financial Crisis (AFC). The AFC impacted the fina...

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Published inEuropean Research Studies Vol. 15; no. 1; p. 55
Main Authors Khoon, Goh Soo, Hui, Lim Mah, Sua, Tan Yao
Format Journal Article
LanguageEnglish
Published Anixis Professor El Thalassinos 01.01.2012
Subjects
American dollar
Competitive advantage
Consumption
Currency
Economic conditions
Economic crisis
Economic growth
Economic models
Economic policy
Economic recovery
Electronics industry
Exports
GDP
Gross Domestic Product
Impact analysis
International finance
Macroeconomics
Portfolio investments
Productivity
Recessions
Securities markets
Studies
Subprime lending
Asia
Malaysia
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Summary:This paper examines the impact of the 2008 Global Financial Crisis (GFC) on Malaysia's economy as well as challenges and responses of the government in countering this crisis. It argues that the impact of the GFC is different from the 1997 Asian Financial Crisis (AFC). The AFC impacted the financial industry with the resultant collapse of Malaysia's currency, while the GFC impacted the export sector with direct repercussions on Malaysia's real economy. This paper explores the structural weaknesses of Malaysia's economy exposed by the GFC. Given that Malaysia's economic growth had become more trade-dependent after the AFC, domestic investments, including foreign direct investments, could only grow anemically. This had jeopardized long-term economic growth and productivity, which were crucial in offsetting the impact of the GFC. This paper shows that the expansionary policies implemented by the government to counter the GFC were lacking in meaningful structural changes and could not yield the desirable results. Lastly, it assesses the extent to which the New Economic Model proposed by the present government could spur economic growth in dealing with the GFC. [PUBLICATION ABSTRACT]
ISSN:1108-2976