“I wish to point out that gross domestic product measured in the US dollar is not relevant for a matured and sophisticated economy like Malaysia...”

DATUK SERI JOHARI ABDUL GHANI, Second Finance Minister

KUALA LUMPUR: Economic activities in Malaysia transacted by households, businesses and the public sector in ringgit makes the currency more reflective of the economy than the US dollar, said Second Finance Minister Datuk Seri Johari Abdul Ghani.

“Gross domestic product (GDP) measured in US dollar is not relevant for a matured and sophisticated economy like Malaysia, nor is the GDP measured in US dollar appropriate for an economy that is not ‘dollarised’ in any sense.

“In any economy that is ‘dollarised’, there would be a loss of policy independence and flexibility, hence undermining a nation’s sovereignty.”

Johari was commenting a statement by the Federation of Malaysian Manufacturers that the strong growth Malaysia experienced in the first half was not accurate as growth would be negative if prices were quoted in US dollars. “Such statement could cause confusion and is not only misleading, but reflects poor understanding of how the economy works,” he said.

The compilation of GDP is in line with international standards as stipulated by World Bank and International Monetary Fund. The Department of Statistics surveys and compilations are wide-ranging and inclusive of all sectors of the economy.

“The GDP is reported in constant prices that has taken into account the effects of price changes and exchange rate movements. In other words, the GDP reflects only the changes in the quantity of goods and services produced in the country.”

Malaysia recorded 5.8 per cent in the second quarter and 5.6 per cent in the first quarter. Rupa Damodaran