Malaysia Economic Analysis
Malasyia
Country Report
3/7/2013
By: Zara Khurram
Economic Analysis of Malaysia
Malaysia is a multi-cultural Southeast Asian country with a federal constitutional monarchy. Malaysia originated from the Malay Kingdoms which were subject to the British Empire for a long time. Malaysia gained independence in August 1957. Today, Due to Malaysia’s natural resources, it has an average GDP growth rate of 6.5% for around 50 years.
Malaysia has a very attractive GDP growth, due to its various strengths in its economy, healthcare, abundance of natural resources and literacy. Malaysian economic strength is due to various factors including strong trading partners, controlled inflation, and positive balance of trade. Malaysia has the best facilities in healthcare. The government spends a lot on subsidizing infant industries, social security and education. Although the Malaysian government promotes privatization and market economy, the economy is to some extent regulated by the government.
The global financial crisis hit Malaysia in 2008–09. Hence, the Central bank of Malaysia, Bank Negara Malaysia (BNM), reduced the discount rate by 150 basis points and also let the currency depreciate due to capital outflow. This countercyclical move softened the impact of the crisis and saved the economy from a –2.9 percent contraction in GDP growth. The inflation and unemployment is also controlled by the monetary policies of BNM (Figure A). All these factors result in a strong economy of Malaysia with high GDP growth. Furthermore, Malaysia has strong trade partnerships as shown in figure B. These lead to a positive balance of trade for Malaysia. Malaysia is also members with many trade organizations such as ASEAN Free Trade Area. Malaysia’s strength also lies in its high Literacy rate (around 96%).
Another fact that needs mentioning is that Malaysia is the world leader in Islamic-finance. Over one fifth of Malaysian banking system is sharia-compliant.
Country Report
3/7/2013
By: Zara Khurram
Economic Analysis of Malaysia
Malaysia is a multi-cultural Southeast Asian country with a federal constitutional monarchy. Malaysia originated from the Malay Kingdoms which were subject to the British Empire for a long time. Malaysia gained independence in August 1957. Today, Due to Malaysia’s natural resources, it has an average GDP growth rate of 6.5% for around 50 years.
Malaysia has a very attractive GDP growth, due to its various strengths in its economy, healthcare, abundance of natural resources and literacy. Malaysian economic strength is due to various factors including strong trading partners, controlled inflation, and positive balance of trade. Malaysia has the best facilities in healthcare. The government spends a lot on subsidizing infant industries, social security and education. Although the Malaysian government promotes privatization and market economy, the economy is to some extent regulated by the government.
The global financial crisis hit Malaysia in 2008–09. Hence, the Central bank of Malaysia, Bank Negara Malaysia (BNM), reduced the discount rate by 150 basis points and also let the currency depreciate due to capital outflow. This countercyclical move softened the impact of the crisis and saved the economy from a –2.9 percent contraction in GDP growth. The inflation and unemployment is also controlled by the monetary policies of BNM (Figure A). All these factors result in a strong economy of Malaysia with high GDP growth. Furthermore, Malaysia has strong trade partnerships as shown in figure B. These lead to a positive balance of trade for Malaysia. Malaysia is also members with many trade organizations such as ASEAN Free Trade Area. Malaysia’s strength also lies in its high Literacy rate (around 96%).
Another fact that needs mentioning is that Malaysia is the world leader in Islamic-finance. Over one fifth of Malaysian banking system is sharia-compliant.
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