Malaysian Economy in Three Crises

This paper examines macroeconomic experiences and policies of Malaysia with emphasis on the three major crisis episodes during the post independence era. It probes the nature and origin of the macroeconomic shocks and the institutional and ideological influences on policy formulation and the responses of economic agents, placing the three episodes in their historical, economic and political contexts. It is argued that fiscal profligacy was the root cause of Malaysia's vulnerability to the 'commodity shock' in the mid-1980s and the Asian Financial crisis (1997-8), and the impact of the global financial crisis of 2008 on the Malaysian economy would have been much more severe if it were not for the macroeconomic discipline imposed on the Malaysian authorities by the Asian financial crisis.