ASIAN FINANCIAL CRISIS

Malaysia
 WHAT IS ASIAN
FINANCIAL
CRISIS
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 ASIAN FINANCIAL CRISIS
• Also known as “Asian Contagion”

• Started from 1997 and ended in 1999

• Major global financial crisis that destabilized

the Asian economy and then the world economy at the
end of the 1990s.

• Began in Thailand

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 WHAT CAUSED THE ASIAN
FINANCIAL CRISIS
• Key reason for the turmoil was simply panic, with sudden shifts in
market expectations and loss of confidence resulting in financial chaos
across Asia.

• The crisis reflected an unsustainable deterioration in macroeconomic

fundamentals and poor economic policies in the affected Asian
countries

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MALAYSIA ON
ASIAN
FINANCIAL
CRISIS

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 • The ringgit had depreciated from 2.50 to 4.57 within 7
months

• loss of value of over 50%

• Poverty rate: 7% after the financial Crisis

• Increased interest due to the Crisis

• Malaysia suffered only a relatively mild shock. This

resulted from the relatively strong initial conditions,
both in terms of the real economy and the financial sec-
tor, as well as the rapid measures introduced by the
Malaysian government during the course of the crisis.

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 GDP P.C. Annual Growth
20.00%

GDP
10.00%

GDP
Date GDP per capita P.C. Annual Growt
h
0.00%
1998 3,470$ -29.8% 1995 1996 1997 1998
1997 4,941$ -3.2%
1996 5,103$ 10.6%
-10.00%
1995 4,612$ 16.2%

-20.00%

-30.00%

-40.00%
GDP P.C. Annual Growth

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 3.50%
Unemployment Rate
3.00%

UNEMPLOYMENT RATE 2.50%

2.00%
1.50%
1.00%
0.50%
Date Rate
0.00%
1995 1996 1997 1998
1998 -3.20%
1997 2.45%
1996 2.52%
1995 3.14%

Unemployment Rate

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 MALAYSIA ON
RECOVERY FROM
ASIAN
FINANCIAL
CRISIS

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 RECOVERY PLAN

• Over-dependence on the banking system had led to a rapid growth in bank

loans averaging 25 per cent during the period prior to the crisis.

• Two agencies were set up to restore confidence in banking institutions:

• Danaharta Nasional Bhd

• an asset management agency to purchase and manage the NPLs of financial
institution

• Danamodal Nasional Bhd

• as assigned the job of recapitalizing banking institutions

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 THANK YOU

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