The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Malaysia: Scrabbling on the precipice

When the Asian crisis took hold the notion was that Malaysia was somehow different and could escape the worst effects. There's little room for such optimism now. How hard Malaysia lands may depend on Japanese recovery and the extent to which the government is willing to relax its fiercely nationalist economic policies. Nicholas Bradbury reports.

Although few observers are prepared to make unconditional predictions of collapse in Malaysia, prognoses are far less optimistic than six months ago, and deteriorating by the week. "Given the pace of the economic slowdown that we are seeing from the most recent numbers, the risk is all on the downside," says Gan Chin Lee, Singapore-based senior economist at Nikko Research. "I'm just in the middle of revising down my GDP forecasts for 1998 from plus 2% to minus 1%." Growth in 1997 was around 7% and just weeks ago the government was forecasting 4.5% growth this year.

With Indonesia suffering riots and near collapse of the government, Korea facing the restructuring of much of its industrial base and Thailand feeling the strain of the IMF austerity package, a pessimistic view of Malaysia is understandable. Yet in the middle of last year, when events in Thailand prompted the financial rout that spread across Asia, Malaysia was reckoned to be very different from its neighbours.

Its property sector was much less speculative than that in Thailand, the arguments ran, and its banking system was better capitalized. If the ringgit weakened, exports would boom, rapidly improving the current account and stabilizing the exchange rate.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree