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Malaysia and the Global Crisis: Impact, Response, Rebalancing Strategies

Author

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  • Nambiar, Shankaran

    (Asian Development Bank Institute)

Abstract

The economic crisis that began in the United States had an effect on the developed world, including the European Union, Japan, and Singapore. The downturn of the economy in the United States, coupled with developments in the European Union, Japan, and Singapore, has affected the Malaysian economy. This paper argues that Malaysia, being a small open economy with a strong export-dependent manufacturing sector, was particularly vulnerable to the global crisis. The very countries that generate the demand for Malaysian exports have been struck by the crisis, leading to declines in output in Malaysia. These declines have resulted in labor market shocks which have led to retrenchments. The severity of the crisis and its prolonged duration requires an approach that is not unduly dependent on export-led growth. This paper will suggest that Malaysia adopt a rebalancing strategy in response to the current crisis.

Suggested Citation

  • Nambiar, Shankaran, 2009. "Malaysia and the Global Crisis: Impact, Response, Rebalancing Strategies," ADBI Working Papers 148, Asian Development Bank Institute.
  • Handle: RePEc:ris:adbiwp:0148
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    More about this item

    Keywords

    malaysia financial crisis; export and labor markets; rebalancing strategy;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F10 - International Economics - - Trade - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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