Why is the Malaysian economy going down?

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thetall eNotes educator| Certified Educator

Malaysia’s economical woes can be traced back to the Chinese economic slowdown. The country is one of the China’s largest trading partners and the ripples of the downturn in China were bound to be felt in Malaysia. Apart from the ripple effects from her trading partners, the country is also facing a stronger U.S. Dollar which has seen the country’s currency plummet in trade value.

Malaysia is also facing stiff competition from her neighbors especially Vietnam, Bangladesh and other emerging markets. This is with regards to labor costs which were previously the country’s selling point to attract investors. Investors are currently holding back and some are actively engaging Malaysia’s neighbors. The situation has further been aggravated by ongoing political turmoil creating an environment which is unsuitable for economic growth.

The crackdown on dissent seems to have further unsettled markets, and possibly sparked greater capital flight from Malaysia, a country already plagued by high levels of capital flight. (Kurlantzick Joshua)

Malaysia has also been known to rely heavily on the commodities market, especially on rubber and tin exports. The future looks bleak for the commodities market due to the falling prices of rubber globally and the depletion of tin reserves, which presents a major threat to the economy.