From the late 1950s, political conflict and economic deterioration worsened. By the mid-1960s, the cash-strapped government had to scrap critical public sector subsidies, estimates put annual inflation at 500-1,000%, export revenues were shrinking, infrastructure crumbling, and factories were operating at minimal capacity with negligible investment. Severe poverty and hunger were widespread, and Sukarno led his country in a military confrontation with Malaysia while stepping up revolutionary and anti-western rhetoric.