Essays on Asia in the World Economy - Impact of the 2008 Global Financial Crisis on Malaysia Case Study

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The paper “ Asia in the World Economy - Impact of the 2008 Global Financial Crisis on Malaysia” is a dramatic variant of the case study on macro & microeconomics. The 1997 Asian financial crisis had devastating economic, political, and social impacts on Malaysia. The crisis originated in Thailand and was mainly restricted to Asian countries. The impact of this crisis was drastic and did not give the countries time to prepare and mitigate its impacts. On the other hand, the 2008 crisis originated in the USA and greatest impact was felt in developed countries such as the USA, Europe, and Japan.

Though the impact of 2008 affected Malaysia, it was not as devastating as that experienced in 1997. In addition, the impact was also slow and the government had enough time to put into place monetary and investment plaices to reduce its adverse effects. OverviewThe 1997 Asian financial crisis had a traumatic impact on Malaysia (Khoon and Mah-Hui, 2010). The crisis resulted in economic and political turmoil in Malaysia. The stock market, currency, and the property market nearly collapsed (Zin and Shahadan, 2009).

The deputy president Anwar Ibrahim from the Malaysian dominant party UMNO was forced out of government due to the crisis when he disagreed with the then-president Mahathir Mohamad over Mahathir’ s rejection of loans from IMF (Abidin and Rasiah, 2009). Malaysia is export dependent economy and given its openness it was not spared from the recent global financial crisis. The 2008 financial crisis impacted negatively on Malaysian exports and industrial output (Khoon and Mah-Hui, 2010). It also resulted in a decline in investments. The 2008 financial crisis also adversely affected consumer sentiment in Malaysia.

Consequently, Malaysian GDP growth in the last quarter of 2008 was very low at 0.1% in comparison to the average of 5.9% in the first three quarters of 2008. The 2008 global financial crisis resulted in One spiralling inflation in Malaysia (Haddad and Shepherd, 2011). The inflation rate experienced 2008 in Malaysia was the highest than ever before.


Abidin, D., and Rasiah, R. 2009. The global financial crisis and the Malaysian economy: Impact and Responses. University of Malaya: A Joint ISIS and UM Report Commissioned by the UNDP.

Zin, R., and Shahadan, F. 2009. Impact of global economic crisis on the Malaysian auto-parts industry. Background Paper for Conference on the "The Impact of the Global Economic Slowdown on Poverty and Sustainable Development in Asia and the Pacific", 28-30 Sept 2009, Hanoi.

Haddad, M., and Shepherd, B. 2011. Managing Openness: Trade and Outward-Oriented Growth After the Crisis. New York: World Bank Publications.

Ibrahim, M. 2009. Impact of the global crisis on Malaysia’s financial system. BIS Papers No. 54

Khoon, G., and Mah-Hui, M. 2010. The impact of global financial crisis: The case of Malaysia. Third World Network: TWN Global Economy Series.

Peters, M. 2010. What the 2008/2009 World Economic Crisis Means for Global Agricultural Trade. New York: DIANE Publishing.

World Bank. 2010. Global Economic Prospects 2010: Crisis, Finance, and Growth. Washington, DC: World Bank Publications

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