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The Policy Responses and Implications of the Global Financial Crisis in Asia: A Case Study for Malaysia

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  • Goh Soo Khoon
  • Lim Mah Hui
  • Tan Yao Sua

Abstract

This paper examines the impact of the 2008 Global Financial Crisis (GFC) on Malaysia’s economy as well as challenges and responses of the government in countering this crisis. It argues that the impact of the GFC is different from the 1997 Asian Financial Crisis (AFC). The AFC impacted the financial industry with the resultant collapse of Malaysia’s currency, while the GFC impacted the export sector with direct repercussions on Malaysia’s real economy. This paper explores the structural weaknesses of Malaysia’s economy exposed by the GFC. Given that Malaysia’s economic growth had become more trade-dependent after the AFC, domestic investments, including foreign direct investments, could only grow anemically. This had jeopardized long-term economic growth and productivity, which were crucial in offsetting the impact of the GFC. This paper shows that the expansionary policies implemented by the government to counter the GFC were lacking in meaningful structural changes and could not yield the desirable results. Lastly, it assesses the extent to which the New Economic Model proposed by the present government could spur economic growth in dealing with the GFC.

Suggested Citation

  • Goh Soo Khoon & Lim Mah Hui & Tan Yao Sua, 2012. "The Policy Responses and Implications of the Global Financial Crisis in Asia: A Case Study for Malaysia," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 55-70.
    • Handle: RePEc:ers:journl:v:xv:y:2012:i:1:p:55-70
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    File URL: http://www.ersj.eu/repec/ers/papers/12_1_p4.pdf
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    References listed on IDEAS

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    1. World Bank, 2009. "Malaysia Economic Monitor, November 2009," World Bank Publications - Reports 3132, The World Bank Group.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 215-268, November.
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    4. Yılmaz AKYÜZ, 2008. "The current global financial turmoil and Asian developing countries," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 23(273), pages 7-49.
    5. Liviu Deceanu & Mirela Pintea & El Thalassinos & Vicky Zampeta, 2010. "New Dimensions of Country Risk in the Context of the Current Crisis: A Case Study for Romania and Greece," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 225-236.
    6. Eleftherios Thalassinos & Pantelis E. Thalassinos, 2006. "Stock Markets' Integration Analysis," European Research Studies Journal, European Research Studies Journal, vol. 0(3-4), pages 3-14.
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    Cited by:

    1. Dinh, Dung V. & Powell, Robert J. & Vo, Duc H., 2021. "Forecasting corporate financial distress in the Southeast Asian countries: A market-based approach," Journal of Asian Economics, Elsevier, vol. 74(C).

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    More about this item

    Keywords

    Global Financial Crisis; Asian Financial Crisis; Malaysian Economy; Economic Countering Measures;
    All these keywords.

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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