The Global Crisis, Trade, and the Malaysian Economy

Abstract

The importance of trade to the Malaysian economy cannot have been more strongly expressed than through the recent global crisis. Malaysia was vulnerable being a small open economy that has an export-dependent manufacturing sector. The very countries that generate the demand for Malaysia’s exports were struck by the crisis. As can be expected, Malaysia’s exports plummeted. The impacts of the crisis, consequently, caused reduced activity in the manufacturing sector and resulted in a sharp contraction in output. The crisis demands that policy makers take the challenge of strengthening the export sector more seriously.