II - Key Economic Sectors of Malaysia and Thailand

Summary

Tables 2.1 and 2.2 provide some background information on the Malaysian and Thai economies. In the context of this study, the information on the manufacturing sector would be of particular interest.

Malaysia

The Malaysian gross domestic product (GDP) growth rate has been reasonably high, as shown in Table 2.1. It was in the region of 6–7 per cent until the recession of 1985 when a negative growth rate of −1 per cent was recorded. Subsequently, there was a marginal improvement in growth in 1986 as the impact of the recession continued to be felt. However, the economy has begun to recover since mid-1987 as a result of improvements in external demand for manufactured exports and increased prices for commodities. The 1987 GDP growth rate improved significantly over the 1986 figure to record an impressive 5.2 per cent. The following year, 1988, proved to be even better. With the buoyant external demand for manufactured goods and stable and high prices for commodities, particularly rubber and oil palm, the Malaysian GDP growth rate climbed back to its pre-1985 levels by turning in a growth achievement of 7.4 per cent.

It will be noticed that growth rates in the manufacturing sector were higher than the overall GDP growth rates. Prior to 1985, manufacturing growth had increased steadily to peak at 12.3 per cent in 1984. However, the recession in 19 85 affected the sector adversely and resulted in a negative growth rate of −3.8 per cent, but it rebounded quite rapidly and has been growing impressively since then. Growth has been particularly encouraging after 1986: in 1987 a growth of 12.8 per cent was recorded, and in 1988 the rate was even higher at 15.5 per cent. As a recent Wall Street Journal (1 August 1988) article put it “manufacturing has been the big story of the (Malaysian) recovery. Spurred by overseas demand, the manufacturing sector accounted for 22 per cent of Malaysia's inflation-adjusted GDP in 1987, narrowly surpassing agriculture for the first time”.