The main aim of the assignment is to analyze the economy of Malaysia and its inflation condition.
Inflation can be defined as general rise in the prices of goods and services over a particular span of time for fixed baskets of goods and services. Increase in inflation raises the prices while it decreases the purchasing power of the consumer. It is the percentage change in the value of goods and services in the economy (Galí 2015).
Consumer price index is an approach to measure inflation in an economy. Consumer price index measures the changes in the prices of the fixed basket of consumer goods and services purchased by households during any particular time interval (Index and Indicators 2014). The consumer price index in Malaysia includes:
The most important categories in CPI in Malaysia are Food and alcoholic beverages that account for 30% of contribution. The consumer prices in Malaysia fell in 2016 due to gradual fall in the cost of transportation, and other public utilities. The rate of inflation rose in the year 2014 and fell in 2015 (Hong and Razak 2015).
Table: 20 years Inflation Rate from 1996 – 2015 in Malaysia
Year |
Inflation rate (%) |
1996 |
3.5 |
1997 |
2.7 |
1998 |
5.3 |
1999 |
2.7 |
2000 |
1.5 |
2001 |
1.4 |
2002 |
1.8 |
2003 |
1.0 |
2004 |
1.5 |
2005 |
3.0 |
2006 |
3.6 |
2007 |
2.0 |
2008 |
5.4 |
2009 |
0.6 |
2010 |
1.7 |
2011 |
3.2 |
2012 |
1.7 |
2013 |
2.1 |
2014 |
3.1 |
2015 |
2.1 |
(Source: Data.worldbank.org. 2016).
Figure: inflation rate in Malaysia
The rate of inflation is Malaysia is fluctuating in nature. The inflation rate was highest in the year 2008 while it was lowest in 2009. The rise in the inflation rate in Malaysia is due to an increase in the prices of crude oil. The rise in the prices of natural resources leads to an increase in the price of natural gases and other items that leads to rise in inflation rate. Another reason for the inflation rate in Malaysia is due to the rise in the wages and salary of the government servant. Thirty percent of goods in Malaysia are price controlled. The inflation rate in Malaysia in recent year has been falling due to fall in the prices of transportation and other public utilities. The average rate of inflation in Malaysia is 3.14 percent in the year 2014 as compared to the previous year. This shows that the economy of Malaysia is recovering. The annual growth rate in GDP in Malaysia is 4.7 percent in 2013 and it is the most competitive country in the world. One of the reasons for the prices of goods and service in 1998 was the currency crisis that led the prices of goods to rise. The second was the global financial crisis in 2008 that also led the prices to rise (Tradingeconomics.com. 2016).
Government uses various policies to control inflation in Malaysia. The bank of Negara in Malaysia acts as central banks helps the other commercial banks and the government by giving financial advice to control inflation. The policies implement by Malaysian government are:
The policies implied by the government in Malaysia have helped the economy control its rate of inflation. The consumer price index in January 2016, increased by 0.6 percent due to the increase in the prices of food and non alcoholic beverages. The rise in CPI leads the inflation rate to rise in January 2016. Core inflation differs from overall CPI and is calculated excluding the prices of the goods and services that are subject to fluctuation. It is used for directing the monetary policies in the economy. There are various policies that have been implemented by the government of Malaysia. It is one of the most competitive economies in the world with the average rate of growth accounted for 4.7 percent annually (Shaari et al. 2012).
Hence, inflation rate is an important measure or economic indicator that helps in determining the economic growth. Inflation rate ion the changes in the prices of goods and services in the economy. It is essential for the government to use policies that controls the inflation. There are various reasons that can cause the prices of the goods and services to rise in the economy. The main reason for the rise in prices of goods and services in Malaysia is the rise in the prices of crude oils. The second reason is the rise in the wages and salaries of the government employees. Government uses various policies such as monetary policies, fiscal policies and direct or physical methods to control the inflation in the economy. The global financial crisis and the currency crisis in the past had led the prices and the inflation rate to rise. The bank of Negara is the central bank in Malaysia that plays a major role in controlling the rate of inflation in the economy. Consumer price index is used as a tool to measure the changes in the prices of the fixed basket of goods and services. The basket of consumer goods is compromised of many products and items such as durable, non durable goods, services, food, alcoholic and non alcoholic beverages and electricity and other basic necessities.
Data.worldbank.org. (2016). Data | The World Bank.
Galí, J., 2015. Monetary policy, inflation, and the business cycle: an introduction to the new Keynesian framework and its applications. Princeton University Press.
Hong, S.C. and Razak, S.H.A., 2015. The impact of nominal GDP and inflation on the financial performance of Islamic banks in Malaysia.
Index, C.P. and Indicators, L.E., 2014. Consumer Price Index.
Level, P.C.O.Y.A., 2015. Consumer Price Index.
Olivera, J.H., 2014. Money, prices and fiscal lags: a note on the dynamics of inflation. PSL Quarterly Review, 20(82).
Shaari, M.S., Hussain, N.E. and Abdullah, H., 2012. The effects of oil price shocks and exchange rate volatility on inflation: evidence from Malaysia.International Business Research, 5(9), p.106.
Sharma, S.S., 2016. Can consumer price index predict gold price returns?.Economic Modelling, 55, pp.269-278.
Tradingeconomics.com. (2016). Malaysia Inflation Rate Forecast 2016-2020.
Weale, M., Blake, A., Christodoulakis, N., Meade, J.E. and Vines, D., 2015.Macroeconomic Policy: inflation, wealth and the exchange rate (Vol. 8). Routledge.
Earn back money you have spent on downloaded sample
To export a reference to this article please select a referencing stye below.
Assignment Hippo (2022) . Retrive from https://assignmenthippo.com/sample-assignment/economy-of-malaysia-and-its-assessment-answer
"." Assignment Hippo ,2022, https://assignmenthippo.com/sample-assignment/economy-of-malaysia-and-its-assessment-answer
Assignment Hippo (2022) . Available from: https://assignmenthippo.com/sample-assignment/economy-of-malaysia-and-its-assessment-answer
[Accessed 29/05/2022].
Assignment Hippo . ''(Assignment Hippo,2022) https://assignmenthippo.com/sample-assignment/economy-of-malaysia-and-its-assessment-answer accessed 29/05/2022.
Talk to our expert to get the help with Economy Of Malaysia And Its Assessment Answers from Assignment Hippo Experts to complete your assessment on time and boost your grades now
The main aim/motive of the finance assignment help services is to get connect with a greater number of students, and effectively help, and support them in getting completing their assignments the students also get find this a wonderful opportunity where they could effectively learn more about their topics, as the experts also have the best team members with them in which all the members effectively support each other to get complete their diploma assignment help Australia. They complete the assessments of the students in an appropriate manner and deliver them back to the students before the due date of the assignment so that the students could timely submit this, and can score higher marks. The experts of the assignment help services at www.assignmenthippo.com are so much skilled, capable, talented, and experienced in their field and use our best and free Citation Generator and cite your writing assignments, so, for this, they can effectively write the best economics assignment help services.
Want to order fresh copy of the Sample Economy Of Malaysia And Its Assessment Answers? online or do you need the old solutions for Sample Economy Of Malaysia And Its Assessment Answer, contact our customer support or talk to us to get the answers of it.
Assignment Help AustraliaWant to order fresh copy of the Economy Of Malaysia And Its Assessment Answers? online or do you need the old solutions for Sample Economy Of Malaysia And Its Assessment Answer, contact our customer support or talk to us to get the answers of it.
Our motto is deliver assignment on Time. Our Expert writers deliver quality assignments to the students.
Get reliable and unique assignments by using our 100% plagiarism-free.
Get connected 24*7 with our Live Chat support executives to receive instant solutions for your assignment.
Get Help with all the subjects like: Programming, Accounting, Finance, Engineering, Law and Marketing.
Get premium service at a pocket-friendly rate at AssignmentHippo
I was struggling so hard to complete my marketing assignment on brand development when I decided to finally reach to the experts of this portal. They certainly deliver perfect consistency and the desired format. The content prepared by the experts of this platform was simply amazing. I definitely owe my grades to them.
Get instant assignment help