The Economy of Malaysia
The 1997 Crisis and Capital Controls
In 1997 Malaysia rejected an IMF programme, imposed capital controls and pegged the ringgit, an unusual response that generated debate.
Malaysia charted its own course.
Crisis
The ringgit and stock market collapsed in 1997 as capital fled the region.
Response
In 1998 Malaysia imposed capital controls and pegged the ringgit at 3.80 to the dollar.
Outcome
The economy recovered, but analysts disagree whether the controls were responsible.
End of peg
The peg was dropped in 2005.
A different path
While neighbours took IMF loans, Malaysia relied on its own measures.
Claiming there is a clear verdict
Economists still disagree.
Key takeaways
- Malaysia refused IMF help.
- Controls and a peg were used.
- Recovery followed.
- The peg ended in 2005.
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