Asian Insights

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Malaysia’s long road to reform: opportunities and challenges

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Financial stresses a potential drag on asian economic prospects

  • Discussions with Malaysian stakeholders suggest that the key task for Malaysia’s long-run prospects is to rectify previous policy mistakes to unleash the potential for growth.
  • The cyclical outlook remains broadly positive, with consumption showing resilience despite losing the one-off boosts from pension drawdowns and excess savings.

Financial stresses a potential drag on asian economic prospects

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Financial stresses a potential drag on asian economic prospects

  • The recent financial market turbulence is the product of a new asset pricing regime resulting from tightened monetary conditions. As investors and businesses reposition themselves in this new regime, there will be more such episodes of stress.
  • Asian resilience has held up admirably to date, with an external slump compensated by strength in domestic spending. A fuller recovery of tourism provides further upside.