Session Brief for Launch of the 17th Malaysia Economic Monitor: Turmoil to Transformation: 20 years after the Asian Financial Crisis

Context

The Asian Financial Crisis was a watershed moment for East Asia’s major economies. However, many East Asian economies used the opportunity to strengthen focus on macroeconomic management, and the resilience of their economies and financial sectors. While sharing a common destination, not all East Asian countries took the same path. Malaysia is a particularly interesting case, where policy choices differed from those employed by other countries affected. The country not only appealed to then-unorthodox macroeconomic management steps, but also leverage reforms to help protect against future crises. This has led to salient discussions on Malaysia’s comparative resilience against future economic shocks, especially now that the economy is larger and more interconnected than in the past, and given its path towards high-income country status.

Objectives of the Session

• Highlight the ‘Malaysian story’ in the leadup to the Asian Financial Crisis, and the steps it took to mitigate the shock and to shield against future ones.
• Glean the lessons from Malaysia that can be used in other countries. What unique aspects in Malaysia’s structure in the 90s that allowed it to succeed in its heterodox policies (reserves, political will, strong institutions, etc.)? What has changed in Malaysia’s economy, and in the world, that would render future risks higher or lower?