Analysing Economic Growth In Malaysia

Analysing Economic Growth In Malaysia Malaysia is a growing and relatively open economy. Three years ago, according to the World Bank (2007), the economy of Malaysia was the 29th largest economy in the world by purchasing power parity with gross domestic product estimated to be $357.9 billion for the particular year. By referring to the economy of the country, we can evoke that during the following long and severe period of recession, the Malaysian economy has started to grow through the interference of a relaxed monetary and fiscal policies and a high export demand in the electronics sector in particular. Despite the fact that the world economic slowdown was more accentuated than expected and the unprecedented events of September 11 in the US had affected all economies, Malaysia on the other hand was able to maneuver itself in a particular way from a major economic contraction and GDP growth for the year remained in positive territory. Nonethless, Rani (2007) stated that Malaysia has a coherent economic growth record i n GDP over the period 1970-2005. The author added that the economic growth record in GDP was in average 7 per cent at an annual rate. Such rate is characterized by the externalities which influence from time to time such as the oil crises of the 1970s, the downturn in the electronics industry in the mid 1980s, and definitely the Asian financial crisis of 1997. In addition, though given the openness of its economy, Malaysia was not spared from the negative effects of the United States economic slowdown. These effects were in the form of declining manufacturing production and negative export growth. In order to remedy the situation, the Malaysian government’s initiation of strong monetary and fiscal policies to stimulate economic growth through increasing activities related to domestic economy and decreasing the over-dependence on exports helped the nation to sustain a positive real GDP growth. Despite this, the MMoF (Malaysian Ministry of Finance) (2006) revealed that the stan dards of living of the majority of the population were transformed over the 30-year period with the level of GDP per capita in 2000 being about four times that of 1970. In other words, it can be quoted from the ministry that the boom in the economy went uninterrupted for almost a decade (1988-1996 with respective growths of 7 and 10 percent per annum). The ministry added that the main source of growth was the manufacturing sector whose share of GDP increased to 31.4 percent in 2005. One emmerging point highlighted Barlow (2001) is that Foreign Direct Investment (FDI) has been a key driver underlying the strong growth performance experienced by the Malaysian economy. Overview of the Malaysian Economic Growth and Developemnt Malasyia four almost forty years and through the World Bank’s countryà ¢Ã¢â€š ¬Ã‚ classification system was as a middleà ¢Ã¢â€š ¬Ã‚ income country. From then, the country had carried oenjoying a relative prosperity translated initially as a commodity ex porter of rubber, tin, then palm oil and petroleum which generated a total income of between 6 to 7 percent each year from 1970 until 2000. Athukorala, (2001) portrayed that the number of poor persons known as those consuming less than the purchasing power parity US$1 per day metric has fallen to fewer than a million, or 3.9 percent of the population of 26.2 million people (compared to about half of the population in 1970).