Essay On Inflation In Malaysia

Since the 1980s, the industrial sector has led to the economy growth of Malaysia. This is because there is high level of investment such as heavy industries and manufactured industries, which led to Malaysia’s domestic activity and export increases. So, Malaysia achieved GDP growth with low inflation in 1980s and 1990s. From the late 1980s, mutual funds, hedge funds, and other institutional and even individual investors are looking to invest in the rapidly growing economies of East Asia.

In 1990’s, there was an economic expansion in Malaysia. The overall inflation rate of Malaysia is maintained at above 3% except in year 1997 and 1999 which the inflation rates drop to 2.66% and 2.74%. During this period, there is a robust growth in income and growth. The prices of property, large inflow of capital, led to increase in wealth and hence increase the economy activities of Malaysia during that period. Inflation was peak in year 1998 which is 5.27%, reflecting the rise in cost because of higher import prices. As a result, Malaysia ringgit depreciated. Government had to increase the price ceiling in order to recover the owing to

This is because the demand and supply pressure in 1990s has been dissipated. On the other hands, the inflation rate started to increase in year 2005 and reach to the peak at 2008 which is 5.44%. This price shock is due to the external factor which is the increase of world’s crude oil. The increase in world’s crude oil has directly led to higher global commodity and food price increase. Food price rises due to the heavy used of fuel in development country. The inflation in Malaysia also happens due to the increase of the government servant salary that increases the power purchase for most of the citizens. In short, the increase in fuel led to the increase in the prices to the fuel related product. It had subsequence increased the burden of government on petrol