According to the United Nations Development Report 2006 (figures for 2004) Malaysia’s Gross Domestic Product (GDP) per capita is US $8,090. This falls within the range of US $30,822 (Hong Kong) and US $1,027 (Myanmar) in countries of central, south and east Asia (Figure 5).

Malaysia is a middle-income country which, from 1971 to the late 1990s, transformed itself from a producer of raw materials into an emerging multi-sector economy. Growth was almost exclusively driven by exports - particularly of electronics. As a result, Malaysia was hard hit by the global economic downturn and the slump in the information technology sector in 2001 and 2002. In 2001, GDP grew by just 0.5% because of an estimated 11% contraction in exports, but the economy rebounded in 2002 with a 4.1% increase. In 2004, growth topped 7%; in 2005, 5%.

As an oil and gas exporter, Malaysia has profited from higher world energy prices, although the cost of government subsidies for domestic gas and diesel fuel has risen and offset some of the benefit. Malaysia ‘unpegged’ the ringgit from the US dollar in 2005, but so far there has been little movement in the exchange rate. Healthy foreign exchange reserves, low inflation, and a small external debt are all strengths that make it unlikely that Malaysia will experience a financial crisis over the near term similar to
the one in 1997. The economy remains dependent on continued growth in the US, China, and Japan - top export destinations and key sources of foreign investment. The
government’s Ninth Malaysia Plan outlines a detailed scheme for the allocation of the national budget from 2006-10; targets include the development of higher value-added manufacturing and an expansion of the services sector.¹⁷⁹

Figure 5 Gross domestic product in US dollars: countries in central, south and east Asia, 2004

Source: United Nations Development Report, 2006