Malaysian Eclipse: Economic Crisis and RecoveryJomo Kwame Sundaram Examines the Malaysian economic crisis of 1997-98. The book argues that the crisis was not due to macroeconomic profligacy on the part of governments, but was due to foreign portfolio investor sentiment, herd behaviour, transborder contagion, reversal of short-term capital flows, asset price deflation and their ramifications. The Malaysian economy is compared to others in the region and the effects of contradictory fiscal and monetary policies are traced. The remarkable recovery in Malaysia seen as principally due to successful Keynesian reflationary efforts as well as fortuitous external circumstances, most notably the electronics boom. The authors conclude that reform in the international financial system is urgently needed, but warn that reform prospects have worsened with economic recovery and the apparently receding threat of fresh crises. |
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Anwar Asia Asian economies asset price Bank Negara Malaysia banking system billion Bumiputera capital controls capital flight cent central bank collapse commercial banks corporate crises currency crisis current account deficits declined devaluation dollar domestic East Asian effects especially exacerbated exchange rate export external Figure financial crisis financial institutions financial liberalisation financial system flows foreign borrowings foreign capital inflows foreign direct investment foreign exchange foreign portfolio investment funds growth impact increased Indonesia industrial inflation interest rates international financial investors Jomo K. S. KLCI Kuala Lumpur labour lending macroeconomic Mahathir mainly Malaysian economy Malaysian ringgit manufacturing monetary policy non-performing loans outflows policy responses political portfolio investment inflows pre-crisis private sector production quarter of 1998 Quarterly Rasiah recession reforms region ringgit RM million September 1998 share short-term debt Singapore Source South Korea Southeast Asian stock market Table Thai baht Thailand trade volatility vulnerable