The sustaining growth of the Malaysian economy

The Malaysian economy is one of the most competitive economies in the world. Malaysia is third wealthiest country in the Southeast Asia judging by their GDP per capita. What’s the reason behind the aggressiveness of the Malaysian economy and what are the challenges it faced?

Good old days of the Malaysian economy

International trade plays a very important role on the Malaysian economy as it is one of the countries that control the Strait of Malacca. At some point, it was the largest manufacturer of palm oil, tin and rubber in the world.

In the 1970’s the Malaysian economy began a transition towards a more multi-sector economy, being reliant to agriculture and mining. This made it close to imitate the four Asian Tiger economies (Taiwan, British Hong Kong, South Korea and Singapore).

Deterioration in 2015

2015 was a troubling year for the Malaysian economy, with dropping consumers, rising inflation, continued high level of capital flight, contracting growth, a decreasing currency and investor confidence. The stagnation of the Chinese economy also contributed to the decline of Malaysia’s GDP growth, given that the two countries are major trade partners.

Malaysia’s main objective is to improve its economic health but the progress has been slow. Some say that the Malaysian economy is loaded by numerous structural imbalances that has subsidized to their current economic dilemmas. These hold the rising debt, both of the households and public sector.

As a solution, the Malaysian government allotted an expansionary budget for 2016 with the goal of maintaining growth of their economy. Malaysia got back on track when their government decided to implement the New Economic Policy which was first introduced in the early 1970’s; the key reforms include labour market, GLCs, Education, Institutional reforms and government programs.

Malaysian economy is said to blossom this 2017

The Malaysian economy is said to grow this 2017 at a measure of 4 percent, and will continue to bolster to 4.4 percent in 2018, according to IHS Global Insight chief economist for Asia Pacific Rajiv Biswas. This gain is driven by strong private consumption but will however continue to hurt from sluggish commodity prices.

The ASEAN region and the US economy is said to benefit from Malaysia’s rapid growth due to their GDP rose from 2.4 percent in 2016 to 2.8 percent this 2017.