Economy remains resilient under efficient management
KUALA LUMPUR: Efficient, v i g i l ant pl a n n i n g and management has helped successfully build Malaysia’s strong economic performance s ince the 19 7 0 s, whi le transforming the economy from an over dependence on raw materials as well as agriculture, to a relatively hightech, competitive nation.
The introduct ion of the Nat ional Transformat ion P r o g r amme , a 10 - ye a r transformation strategy to boost the nation towards a high-income status by 2020, has further strengthened Malaysia’s economy and delivered numerous success stories that are the envy of many nations.
Not on l y that, the implementat ion of social programmes that focused on creat ing opportunit ies for entrepreneurship to support the people in increasing their income, as wel l as prudent fiscal position management by the government, has kept the economy resilient.
Mal ay s i a ’ s e c onomi c fundamentals and fiscal position remains solid, recording a 4.2 per cent gross domestic product (GDP) in 2016, while sustaining a trajectory of at least four per cent since the NTP kicked off in 2010, to outpace the global growth rate.
This upward momentum continues, with the economy expanding by 5.8 per cent in the second quarter of this year as compared to 5.6 per cent in the first quarter. Bank Negara Malaysia ( BNM) expects the overall economy to surpass the official estimate of 4.8 per cent growth for 2017.
The government’s strategy in managing the economy has indeed been commendable, reflecting the economic growth that is sustainable and inclusive, thus benefiting all Malaysians.
The positive developments in Malaysia were also backed by strong reports from major international agencies such as the World Bank, International Monetary Fund ( IMF), Asian Development Bank (ADB) and Fitch Ratings Inc.
Earlier this month, the World Bank revised upward its 2017 GDP forecast for Malaysia for the second time to 5.2 per cent from 4.9 per cent previously, saying, it was supported by stronger investments and the recovery in global trade.
Similarly, the IMF projected a 5.4 per cent growth for Malaysia, while the ADB revised upward its forecast to 5.4 per cent from 4.7 per cent.
Fitch Ratings estimated an average five- year real GDP growth of five per cent, well above the “A” category median of 2.9 per cent, while noting the country’s resilient economic performance over the past two years despite several challenges, including lower oil prices and volatile capital flows.
With growth momentum gaining pace in 2017, the rating agency raised its full year GDP growth forecast for Malaysia to 5.1 per cent from 4.5 per cent.
On the fiscal position, which has gradually improved since the introduction of the NTP, the government showed sturdy determination and commitment in keeping to its deficit reduction plans.
The effort has paid off with the fiscal deficit now reduced to 3.1 per cent as at end-2016 from 6.7 per cent in 2009, mainly due to the government’s self-imposed debt limit of 55 per cent of GDP.
The government’s debt-to- GDP was 52.7 per cent in 2016 and it is on track to achieve its fiscal deficit target of three per cent this year.
Growth in Malaysia’s economy was further lifted by higher exports, as increased demand for manufactured products led to a strong growth in real exports. This is despite the country investigations into investment fund 1Malaysia Development Bhd (1MDB) and allegations of bankruptcy by the opposition.
Malaysia’s export grew by 5.6 per cent in the first quarter this year and 8.8 per cent in the following quarter - the most since early 2015.
In t a ndem wit h t he advancement of Malaysia’s economy, the domestic currency performed better against the US dollar in the first two quarters of this year, backed by the positive sentiment surrounding it and the weakening of the greenback.
BNM said the ringgit was the best performing currency in the region during the second quarter, driven by encouraging domest ic macroeconomic conditions, which include the strong GDP growth and exports performance.
The positive ringgit sentiment was also supported by further liberalisation of the bond market and foreign exchange hedging requirements announced by the Financial Markets Committee. — Bernama