Measurement of GDP in ringgit more reflective to nation's economy – Johari
KUALA LUMPUR: The measurement of gross domestic product (GDP) in ringgit is a more reflective factor to the national economy compared to the US dollar as transactions by households, businesses and governments are made in the local currency, Second Finance Minister Datuk Seri Johari Abdul Ghani said.
Brushing aside a proposal from the Federation of Malaysian Manufacturers that GDP should be measured in the US dollar for a better reflection of the country’s economic growth, he said such statement could cause confusion and reflected poor understanding of how the economy worked.
“In view of this internationallyaccepted standard, I wish to point out that GDP measured in the US dollar is not relevant for a matured and sophisticated economy like Malaysia, nor is GDP measured in the 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,” he said in a statement yesterday.
Johari noted that Malaysia’s compilation of the GDP was consistent with international standards as stipulated by the World Bank, as well as the International Monetary Fund, and the Department of Statistics’ surveys and compilations were wide ranging and inclusive of all sectors of the economy.
He said Malaysia's GDP was reported in constant prices, which had already 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,” he said.
Malaysia recorded a robust growth of 5.8 per cent in the second quarter of 2017 and 5.6 per cent in the first quarter compared with the same period in 2016.