THE growth rate of the Malaysian economy in the fourth quarter and the whole of last year was 5.9 per cent. It shows the economy is not just resilient, but also competitive.
Resilient, because it has weathered economic challenges and rebounded well; competitive, because it has the strength and edge to go even further. One can only appreciate this if the economy is analysed based on facts and not negative sentiments or fake news circulating over social media which claim the country is on the verge of bankruptcy.
The 5.9 per cent growth rate is the best since 2014 and one of the best in Asia, surpassing countries such as Singapore (3.6 per cent), South Korea (3 per cent), Taiwan (3.3 per cent) and Indonesia (5.2 per cent). In fact, it is one of the best growth rates in the world, beating the United States (2.5 per cent), United Kingdom (1.5 per cent) and the EU countries (2.7 per cent).
It exceeded the predictions of economists and financial analysts. The median forecast in the Reuters poll, for instance, predicted 5.7 per cent growth, while the Bloomberg survey median estimated it at 5.8 per cent. From October until December last year, the growth rate was primarily driven by private sector and external sector demand. Domestic demand was the dominating factor. It was underpinned by improvements on wages, job creation and infrastructure spending.
Those who claim that the Malaysian economy is undergoing premature de-industrialisation are wrong. Under the Economic Transformation Programme and the New Economic Model, the service sector has been the main focus in transforming the economy, but other sectors are also growing at a healthy pace. This upward growth trajectory is expected to continue this year due to the following reasons:
FIRSTLY, the global economy’s bright outlook will spill over to open emerging economies like Malaysia and this will bring about improvements in trade balance and inflow of capital.
SECONDLY, initiatives in the 2018 Budget are expected to stimulate domestic demand, especially the measures to boost people’s purchasing power, such as Bantuan Rakyat 1Malaysia and income tax cuts.
THIRDLY, improvements in bilateral ties with countries such as China, the United States, India, Saudi Arabia and Singapore, plus multilateral engagements through economic blocs such as the Belt and Road Initiative, Regional Comprehensive Economic Partnership, Asean Economic Community and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. These will expand and deepen Malaysia’s export markets and the external sector.
FOURTHLY, infrastructure development projects such as the second phase of the Mass Rapid Transit line, East Coast Rail Link, Kuala Lumpur-Singapore High-Speed Rail, Pan-Borneo Highway, Tun Razak Exchange will create more jobs and stimulate investment.
FINALLY, the government’s initiatives to make Malaysia a major player in digital economy will bring more growth and revenue to the country. It is also part of the government’s diversification strategy to prepare the economy and youth for Industry 4.0.
Malaysians will benefit in terms of rising incomes, savings and overall quality of life and wellbeing. The evidence is clear when we look at facts such as the latest World Economic Forum report, which ranked Malaysia at number one for inclusive development among Asian emerging economies and the United Nation’s World Happiness Index, which placed Malaysia as the fourth happiest nation in Asia.
DR IRWAN SHAH ZAINAL ABIDIN
Director, Asian Research Institute of Banking and Finance, Universiti Utara Malaysia and visiting research fellow in Islamic Finance at OCIS, Oxford University