Malaysia

Malaysia experienced two major economic upheavals in recent years: the global financial crisis of 2008-2009 and the Asian financial crisis of 1998. They are quite different, however, when we look at their respective causes, impacts and responses. The 2008-2009 crisis came from the developed countries, the United States and the European Union, its impact was transmitted through the real sector, and recovery was achieved by a large fiscal stimulus to boost the domestic economy. The 1998 crisis started in East Asia and it affected the financial sector, which resulted in a severe contraction of the domestic economy. Malaysia’s response to the 1998 crisis was unconventional at that time – the country imposed capital controls, pegged the ringgit and expanded the domestic economy by lowering interest rates and introducing fiscal stimulus programmes.

Related Subject(s): Economic and Social Development

Countries: Malaysia