World Bank: Deepen reforms, ensure growth benefits all

KUALA LUMPUR: Malaysia’s historic election that saw a change of government in over sixty years is a unique window of opportunity to deepen reforms and ensure economic growth benefits everyone, says World Bank Group Macroeconomics and Fiscal Management Global Practice lead economist Richard Record.

Describing Malaysia as a remarkable country by many metrics, he said what was apparent was there was a large disconnect between what the numbers showed and how people felt.

“What we find is that, while average growth might be robust, there is a growing disparity between Malaysians working in services versus manufacturing. Wages in the manufacturing sector, which is mostly export-oriented, are growing at four times as in services,” he said in an article entitled, “Why it’s important to look beyond averages when it comes to Malaysia’s development,” released yesterday.

While average inflation might be low, food and housing costs have been rising at a much faster pace for several years, even more so in urban areas, where they are now a third higher than in 2010.

Low-income households spend much more of their income on food and housing, and in fact, the poorest 10% of Malaysians spend two-thirds of their income on these two items, which has seen the greatest cost build-up, explained Record.

“Coupled with stagnant wage growth for those outside manufacturing, it then becomes clearer why many Malaysians feel that growth isn’t benefiting them. – Bernama