A new Malaysian Prime Minister will be taking over during a deteriorating economy, but monetary policies may help Malaysia’s markets and exchange traded funds (ETFs).

On March 31, Najib Razak, deputy of the former Malaysian Prime Minister, will be sworn in as the country’s sixth prime minister since its independence from Britain, according to the Economist. Malaysians are bracing themselves for a return to “Mahathirism,” a style of leadership that encourages state-led industrialization and promotes “Asian values.”

It is still unclear as to what the Malaysian central bank will to do with its benchmark interest rate, but some economists think it may stay unchanged at 2.5% or even drop down to 1.5%, report Stephanie Phang and Michael Munoz for Bloomberg.

Reports have shown that inflation has eased but exports fell to a record seven-year low. The Southeast Asia’s third-largest economy probably expanded around 1.4% last quarter, and the economy may contract 4% in 2009.

Malaysia’s growth performance may also mirror those of other regional tech exporters like Taiwan and Singapore. The Finance Minister is planing a second stimulus package next month on top of the previously announced $1.9 billion plan in an attempt to prevent a recession.

• iShares MSCI Malaysia Index (EWM): down 8% year-to-date
  

Tags: Asia, Emerging Markets, EWM, Global ETFs, Malaysia