The economic crisis in 1998 had stroke the politics, economics and social aspects of all countries in the world. Malaysia is one of the countries that tried to gain back its stability of economics. The economic crisis has its impact on public sector, made Ringgit Malaysia depreciated, the rise in unemployment and inflation.
The value of Ringgit Malaysia has depreciated and come severe under the selling pressure due to the decreased value of Thai Baht in the mid of May 1997. Bank Negara Malaysia had already lost close to US $1.5 billion in the effort to prop up the value of Ringgit Malaysia. Bank Negara intervened in the foreign exchange market to uphold the value of Ringgit. The value managed to be upholding for a week before it finally was forced to float the Ringgit.
In the public sector, the effect of the crisis began to felt when both expenditure and investment were decreased. In addition, the budget for operating expenses was slashed and the cancellation of several infrastructure mega projects. The initial impact of the crisis that faced by the country was the declining imports of luxury goods.
The crisis has a negative impact on Malaysia social sphere as well. The rise in unemployment and inflation are the main reason of the household income declined. Urban families during that time were experiencing the worst of the impact due to increase cost of living including the cost of food, household necessities, health care, tertiary education and transportation.
In the nutshell, 1998 economics crisis gave huge impacts not only to Malaysia but all country in the world. Malaysian had faced critical situation in politics, economics and social aspects but Malaysia economics has increase rapidly since the crisis.
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