IMPACT OF HIGH OIL PRICES ON THE MALAYSIAN ECONOMY
Posted by jamesesz on September 27, 2008 · 2 Comments
The year 2008 has brought to Asia not only the Beijing Olympics games but also a hosts of economic calamities ranging from the spillover effects from the subprime crisis, the food crisis, and more importantly the unprecedented surge in international oil prices. History has shown us from the oil crisis in the 1970s that high oil prices severely affect economies in both the developed and developing countries. This research paper attempts to briefly study reasons for the spike in oil prices and the impact that high energy prices would bring to Malaysia and other Asian economies. Furthermore, knowing the challenges ahead is only part of the whole picture. More importantly, it is the response of the authorities in charge that will determine how well we weather this current crisis.
The end of the cold war, globalization, the rise of China and the rampant spread of information technology set the stage for a long spell of economic growth, high productivity, low inflation, and booming economy for not just the United States but for most of the rest of the world (Daniel Gross, 2007). The acceleration of the flow of workers across borders to the most competitive markets during the past decade has been a potent disinflationary force that not only held down wage growth but inflation in virtually every country. Yet this period of unprecedented worldwide economic growth coupled with low inflation may be at its end as the subprime and financial crisis has all but crippled the economy of the United States while commodity prices of both food and fuel has reached previously unforeseeable heights.