This article examines the current strengths and remaining sources of vulnerability in Malaysia as well as the challenges for the future. It shows that the recovery in the Malaysian economy since 1998 has been due mainly to exports, resilient private consumption, and a boost in public spending, amid lower investment level. GDP growth is at present at a more moderate level of around 5–6 per cent, thereby reducing concerns of overheating, which was a main issue during the crisis.
The article argues that Malaysia is unlikely to return to the rapid growth of over 9.0 per cent, as in the pre-crisis period, given
the changing and more challenging global economic landscape. The increasing global competition is making it more difficult to attract FDI and expand the export markets.
