KUALA LUMPUR: Malaysia is edging closer to regaining its economic lead over Singapore after trailing for a third straight year.
The nation’s gross domestic product (GDP) was US$314.5 billion in 2017, about US$9.4 billion less than Singapore’s US$323.9 billion, according to data from the World Bank.
That deficit was set to shrink to just over US$2 billion next year as Malaysia’s economy was expected to expand 5.5 per cent in 2018 versus a 3.1 per cent increase in Singapore, according to median estimates of economists surveyed by Bloomberg.
Sunway University Business School economics professor Dr Yeah Kim Leng said the gap would likely narrow substantially this year should the Malaysian economy achieve the projected growth.
“The narrowing gap of US$9.4 billion may however be wider should the ringgit weaken more against the US dollar compared to the Singapore currency,” Yeah said when contacted yesterday.
He said based on available data dating back to 1980, the size of Singapore's economy had exceeded that of Malaysia in five out of 38 years. Three of the five years occurred from 2015 to 2017, largely due to the greater depreciation of the ringgit against the US dollar compared to the Singaporean currency.
“While the size of the Malaysian economy will certainly exceed that of Singapore in the coming years due to its larger population size, Singapore's per capita income continues to rise faster than Malaysia,” he said.
“It rose from three times in early 1980s to presently close to six times whereby Malaysia's per capita income was only US$9,813 compared to US$57,713 for Singapore in 2017,” Yeah added.
Bank Islam Malaysia chief economist Dr Mohd Afzanizam Abdul Rashid said apart from numerical targets, one must also take into account the structure of the economy and the resources available in the country before making a fair assessment about the economy.
“What more important is the income and wealth distribution among the citizens is fairly distributed. In this regard, other measures such as the income gap and social mobility are also important to ensure growth strategies that are inclusive. So it is a delicate balance between having a higher GDP growth and equal and fair distribution of income.
“We should strive to have better quality of our institution so that resources can be used in the most optimum way. For instance, Malaysia’s score in Corruption Perception Index by Transparency International has dwindled to 47 points in 2017.
“Therefore, we should target the CPI score going forward to improve following government’s commitment to address corruption. Aside from that, plugging leakages in govt expenditure and creating equitable opportunity via open tender with regards to procurement could also help elevate our institutional quality,” Afzanizam told NSTP Business.
MIDF Research head Redza Rahman said while the overall number looks impressive, Indonesia was way bigger at over US$900 billion in terms of GDP size.
“What is more important is we need to look at comparison on GDP per capita.
“Malaysia’ GDP per capita is still a distance compared to Singapore’s over US$53,000 but despite smaller GDP that Indonesia, the latter‘s per capita GDP is around US$4,000.
“Perhaps we should look at the growth of GDP per capita which indirectly implies the productivity gain. But I reckon if we are catching up with Indonesian GDP, now that is a different matter because when divided by population, the GDP per capita would be enormous compared to current level,” said Redza.