In a recent Financial Times interview, Najib Razak, Malaysia’s finance minister, said his country’s economy would have to change fundamentally to prosper in a post-credit crisis world. Malaysia has a ratio of foreign trade to gross domestic product of some 200 per cent, making it among the world’s most open economies, along with Hong Kong and Singapore.
That reliance on foreign trade – until recently, something to boast about – has been revealed as an Achilles heel. Malaysia, along with many other Asian economies, has hitched its economic fortunes to the chariot of external demand. But that chariot has just lost its wheels.
