Tuesday, 10 October 2017


"Malaysia is expected to grow more rapidly, reflecting improved confidence, higher investment, and the recovery in world trade."
"Several governments have succeeded in reducing fiscal deficits in 2017, notably Mongolia and Malaysia, but deficits remain high or are on track to increase in many others" 
"The Malaysian economy is expected to sustain its current growth momentum into 2018 and 2019, albeit at a more moderate pace amid expectation of lower capital expenditure growth"

Those are excerpts from the latest World Bank's East Asia and Pacific Economic Update October 2017.

It almost sounds that the World Bank is praising the BN government but for some people this report is a bad news for BN.

I'm referring to an "insight" from one Athena Athena that was published by The Malaysian Insight yesterday stating that the report is bad news for BN while he or she conveniently nitpicking figures from it.

The report shows that the World Bank is forecasting that Malaysia's economy will grow by 5.2% in 2017, 5.0% in 2018 and 4.8% in 2019 and with these figures he or she concluded that Malaysia's economy is going weaker.

The context of the "weaker" economic growth forecast made by the World Bank is explained in the page 124 of the report which stated that Malaysia's economic growth is expected to sustain current growth momentum ALBEIT at a more moderate pace amid expectation of lower capital expenditure growth.

Capital expenditure or gross fixed capital formation here means investments made by private and public sectors. The World Bank is expecting Malaysia's investments growth to decrease to 3.2% in 2018 before increasing to 4.2% in 2019 from 6.1% this year.

Other indicators such as private consumption, government consumption and net exports growth are also expected to be sustained but at slower rates in 2018 and 2019.

The expected slowing down of those indicators growth are mainly due to the base effect where most of them have rebounded strongly this year.

For example:

A makcik has sold RM100 worth of kuih yesterday. Today her sales of kuih increased by RM50 to RM150 - a growth of 50%. If her sales increase by RM50 tomorrow - her sales growth will be 33% (RM50 divided by previous day sales = RM150).

Malaysia is a upper middle income country. Its growth has been faster than other countries in the same category such as Argentina, Brazil, Iran, Mexico, Russia, South Africa and Turkey.

While the report does state that Malaysia (and Thailand) household debt exceeds 70% GDP, it does not mention the fact that Malaysian household financial asset to GDP ratio stood at 181% of GDP. In other words Malaysians' financial assets are two times their debt.

BNM Financial Stability and Payment Systems Report 2016

One must look beyond headline figures such as household debt before jumping into any conclusion.

If the GDP numbers haven't benefited Malaysians, income of Malaysians wouldn't have been rising as evidenced in the report of 2016 Household Income and Basic Amenities Survey released by the Department of Statistics yesterday.

According to the report, median monthly household income in Malaysia increased by 6.6% annually. The income growth adjusted for inflation is at 4.4%. Without a growth in GDP, household income would not have grown.

Indonesia and Thailand created more millionaires than Malaysia? I don't see why that's a bad thing for Malaysia. It means income and wealth distributions in Indonesia and Thailand are more unequal than Malaysia. In fact, according to Credit Suisse's Global Wealth Report 2016, Thailand and Indonesia are among the top 10 world's most unequal countries.

Meanhile Malaysia's income inequality has been declining progressively as reported in the 2016 Household Income Report where Gini coefficient has decreased from 0.401 (2014) to 0.399 (2016) where the bottom 40% (B40) household income grew faster than the top 20% in the same period.

Sure our youth unemployment rate is high, even the government acknowledges that. But we need to also acknowledge that youth unemployment is a global trend. In this region, Indonesia, Philippines and Singapore have higher youth unemployment rates than Malaysia. 

Youth Unemployment in Malaysia: Developments and Policy Considerations

High youth unemployment have also been around since the 90s.

That doesn't mean we don't have to tackle the problem or the government is not doing something about it.

We have programs like Skim Latihan 1Malaysia (SL1M), we are focusing on TVET in the 11th Malaysian Plan and the Malaysian Education Blueprint has outlined meaningful strategies to transform the national education system, empower institutions of higher learning with greater autonomy and accountability, develop technologically savvy and well-rounded graduates.

As a result, unemployed persons in the age group of 15 to 24 years dropped in 2016:

Based on the facts and figures above, clearly it's Athena Athena who's falsifying economic data, selectively quoting reports, omitting good economic news, and twisting the complete economic portrait of Malaysia not Najib.

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