Malaysia's Economy (Fiscal & Monetary Outlook)

Topics: Monetary policy, Inflation, Public finance Pages: 4 (1228 words) Published: October 15, 2012
1.0 Demand Side Policies
In any country’s economy there are demand side policies. In general, demand side policies aims to change the aggregate demand (AD) in the economy. AD consists of factors, which are consumer spending + government spending + investments + exports – imports [C+I+G+(X-M)], and anything that affects these factors will affect demand. Demand side policies consists of monetary policies which focuses on changing interest rates and money supply and fiscal policies which focuses on changing taxation and govt. spending)

2.0 Malaysia’s economy (2010 – 2012)
The economic situation is still resilient since the 2008 recession, and has been showing a substantial positive growth until 2012. 2010 showed positive economic growth as there is a strong economic recovery with the implementation of macroeconomic policy initiatives, which encouraged higher consumption activity and the recovery of private investment. Alongside, a stable employment market, moderate inflation and strong business - consumer confidence provides a conductive environment for the economy as it is predicted to expand at a rapid pace of 9.5% in the 1st half of 2010.

In 2011 – 2012, the economy continues to expand despite challenges in the global economy registered a 4.4% growth in the 1st half of 2011. The moderation was due to slow exports following the weaker-than-expected US economy, euro sovereign debt, and Japan tsunami disaster, which causes a global rise in inflation. The moderation was partly attributed by the high-base effect as GDP grew at a rapid 9.5% during the same period of 2010. However, growth momentum of the economy is expected to pick up during the 2nd half with resilient consumption, strong private investment, acceleration of public infrastructure, and sustained strong exports.

3.0 Fiscal Policy
The fiscal policy for 2011/2012 is to support the economic transformation as fiscal recourses are geared...
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