Topic > Macroeconomics and Economic Growth - 1470

Asian countries have experienced great economic growth in recent years since the early 1970s. The eight major economies that contribute heavily to the enormous economic growth of this region are Japan, Hong Kong, Republic of Korea, Singapore, Taiwan, China, Malaysia, Indonesia and Thailand. There are many factors that contribute to such extraordinary growth and the author agrees that one of the major factors contributing to success is continued macroeconomic stability in these economies. To understand how macroeconomics affects the growth of an economy, we must fully understand what macroeconomics is. Investopedia defines macroeconomics as the field of economics that studies the behavior of the economic aggregate (Investopedia). There are many macroeconomic factors such as government policies, inflation, gross domestic product (GDP) and unemployment rate that we need to study to help us forecast and do analysis on the health of an economy.CASE STUDYA is part of the task, the author will discuss Malaysia's economic progress and its macroeconomic behavior. Malaysia's economy has grown steadily in recent years and it was recently reported that GDP grew by 0.08% in the first quarter of 2014 compared to the previous quarter. Bank Negara said in March that GDP could increase by 4.5% to 5.5% in 2014, compared to 4.7% in 2013 (Tradingeconomics.com). The chart below provides an overview of GDP fluctuations from 2011 to the first quarter of 2014. Source: www.tradingeconomics.com Population The population in Malaysia is growing rapidly which contributes to the high labor productivity which helps boost the economy. ..... half of the paper ... must now focus on developing rural states and creating new sectors to expand the current economy. New policies should be created to financially support the low-income population to reduce credit debts. The government must continuously monitor its interest rate and ensure that it does not increase to prevent unexpected inflation. If the inflation rate becomes too high, there will be a collapse in its economy. It is very difficult for the government to recover from the collapse as it tries to compete with the rest of the growing economies. The central bank must work hand in hand with the government to reduce the country's debt and maintain the current luxury of economic growth. If the government can successfully implement everything that has been discussed, the nation will continue to enjoy a stable and growing economy, on par with the rest.