Essay: Impact on Finance – Malaysia

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  • Subject area(s): Geography essays
  • Reading time: 2 minutes
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  • Published on: November 15, 2017
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  • Number of pages: 2
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Malaysia suffers a huge capital flight due to the global financial crisis 2008. All the financial institution in the US solely focused on their own country’s market and choose to reduce the business from international. Malaysia having a decrease situation on the GDP Growth Rate over the few years and the capital inflows of Malaysia was decreasing from RM37.7 billion in the year 2007 to –RM118.5 billion in the year 2008. In the last quarter of the year 2008, the GDP rate growth in Malaysia decreases to 0.1%. While in the 1st quarter and the 2nd quarter of the year 2009, which is decline to -6.2% and 3.9% in respectively (Figure 6).

Furthermore, Malaysia also one of the countries that impressed by the outflows of portfolio investment because the high volume of foreign investors in Malaysia’s stock market. In year 2008, the KLCI was falling from 1393 points in January to 876 points in December. This is because of the foreigner investors was made a decision which is withdraw investment in Malaysia’s stock market, so we could said that there is a relationship between the stock prices and the changes in net portfolio equity flows.

Foreign exchange rate also can’t be escape from this Global Financial Crisis. The declining in demand in the export and portfolio capital outflows causes the depreciation on the value of Ringgit Malaysia. In the late year 2008, the value of Ringgit Malaysia almost decrease by 6% against US dollar (Figure 10). Apart from the negative impact, the rate of export may be can be better due the value of Ringgit Malaysia is in depreciation situation.

Impact on Trade

In the year 2009, Malaysia suffered declining trade in export due to the Global Financial Crisis 2008. It was declining 28% in year on year terms over the few year which is affected by this global financial crisis (Figure 12). The trade of Malaysia will be affected because of Malaysia is an export dependent country.

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