Growth and the Malaysian economy - some issues for the 1980s

Abstract

This paper views the present economic slow-down in a longer-term perspective and discusses some issues for growth in the Malaysian economy in the 1980's. Although growth in the Malaysian economy slowed to 3.5-4 percent in 1982, we should not equate this, as some economic commentators have done, with an unmitigated disaster, simply because this was half the level of growth we are used to. We should not forget that in 1982 we were growing about one and one-half times as fast as Japan (2.4 percent), while income in the Organisation for Economic Cooperation and Development (OECD) countries as a whole declined by 0.5 percent in real terms, and many other developing countries were struggling to achieve some positive growth. What is clear to us today is that this current slow-down in growth, the third year in succession from the peak of 9.3 percent in 1979, is the longest and most prolonged in recent history. As a small open economy, we cannot insulate ourselves wholly from the international recession. Hence, we must understand some of the underlying causes of the international slow-down in growth to comprehend the impact on the Malaysian economy in the short and long-term.