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Malaysian Economy - Economic Transformation Programme (etp) and Domestic Demand

Autor:   •  July 15, 2013  •  Research Paper  •  2,012 Words (9 Pages)  •  938 Views

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The Malaysian economy has been in a progressive development trend as a result of strategic and effective governance and powerful economic elements. The reason behind the thriving economic strength of Malaysia is the increasing rate of domestic demand, which refers to demands for goods and services of one's own country, private consumption, investments and expenditure. This implies that the economy has had minimum need to rely on foreign markets, even during the euro crisis of 2009, when debt crisis arose because of increasing private and government debts worldwide. When euro became a common currency among the European countries, the bonds in these countries became indistinguishable whether it was sold by Germany or Greece. Thus the banks started to lend money to other weaker euro zone countries resulting in a converging interest rate that caused massive debt crisis among the countries. With this negative impact on its economy, Malaysia's trade exposure has been shifting towards the eastern countries and minimal exposure to euro zone debts, improved financial management system and superior policy efficiency and suppleness.

Economic Transformation Programme (ETP) and domestic demand

The economy of Malaysia is open state oriented and has been growing as an industrialized market economy. Macroeconomic plans initiated by the state have been guiding the economic activities. The GDP as of 2010 was calculated to be $14700, which was the highest rate of increase in GDP in a single year. Malaysia had been a country dependent on domestic goods like tin, rubber and palm oil. However, wisth the increasing level of foreign investment and domestic private investments, Malaysia has been excelling in the world economy as one of the largest exporter of petroleum, electronics, communication technologies and information. It is estimated that at present production rates, Malaysia has the potential to produce oil and LP gas for 18 and 35 years, respectively. Malaysia's economy is anticipated to grow 4-5% in 2012 with the sustained development in domestic demand, which will be driven largely by the domestic sectors. Supportive government policies that include the Tenth Malaysian Plan, 2012 Budget and the Economic Transformation Programme (ETP) show potential to improve economic growth through enhanced domestic demand. Private consumption is believed to rise by implementing the various projects in the ETP, like mega infrastructure projects, My Rapid Transit and coordinated water ways. Under the ETP project, private consumption is said to stay strong and the private investments to become higher. The GDP is believed to become stronger and increase for 2012, with the development of service, industrial, investment and financial sector development, according to the Statistics Department of Malaysia. Also, with the concrete commodity prices, spending in the rural households are expected to increase, sustained by the

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