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.
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