Answer as if you are talking to a 12 year old kid.
2006-11-06 01:41:06 · 7 answers · asked by BMW M5 3 in Travel ➔ Asia Pacific ➔ Malaysia
It was what is called a domino effect, not restricted to Malaysia. In fact all the main Asian economies took a dive at the same time, in particular Singapore and Thailand, Malaysias neigbours and trading partners.
The crisis came because the economies had been expanding too fast for too long, developing a very high standard of living, roads, construction, industrial growth but mostly on borrowed money.
In fact it was too easy for investors to borrow and this resulted in many defaulted loans and unfinished projects all of which undermined the support for the economy.
When a country borrows its currency is devalued but because the borrowing can be hidden by accounting practices the amount of borrowing did not become apparent until it was very severe.
As a result these countries had to go to the IMF (International Monetary Fund) and World Bank to cover their debts. This caused a crisis of confidence in their currencies, heavy selling, and the IMF imposed many rules as a condition of the loans stopping major projects from being completed and cancelling others causing a rapid slow down in the Asian economies and causing unemployment.
The devalued currencies translated into higher prices for all imports.
The recovery could only begin after a period of economic stagnation and harsh monetary controls to pay off the national debts.
2006-11-06 01:58:11 · answer #1 · answered by Anonymous · 3⤊ 2⤋
Boy, you see this balloon. We'll call this balloon the economy. I am the government and the air I will blow into this balloon is the business activity.
As the government, I will blow into the balloon to make it bigger or I can release the air to make it smaller. In doing so, the economy grows or gets smaller.
A well managed economy would keep the balloon, being the economy at a good size. But lets look what happens when something goes wrong.
Now look what happens when the governement has too much air. It burst.
That's what happened in 1997.
2006-11-08 15:01:36 · answer #2 · answered by freaky 3 · 1⤊ 0⤋
u must have a very smart 12 year old to understand what Graham wrote. Anyway, the economy dropped cause the gov. finished all the money...lol !!!
2006-11-06 10:57:44 · answer #3 · answered by Sarah 5 · 0⤊ 2⤋
first n foremost, Malaysia is not a self reliance n stand alone country, Malaysia needed to import/export n business trading with so many country in this world, so if some of this country[business partners] crumbled especially USA, what do you think Malaysia would ? also anything that goes up would come down, the economy[of any country] can't just go up n up n up, right? Thats life !
2006-11-06 16:03:50 · answer #4 · answered by ng 5 · 0⤊ 3⤋
Wow Graham...good answer. You think a 12 year old could understand it tho'?.
2006-11-06 03:31:37 · answer #5 · answered by grendeth 5 · 2⤊ 0⤋
bcos the deputy prime minister ate all the money.
2006-11-08 04:00:01 · answer #6 · answered by BF K 1 · 3⤊ 0⤋
PM makan money
2006-11-08 08:48:08 · answer #7 · answered by Roberto moothoof1201 2 · 2⤊ 0⤋