The fine art of estimating economic health

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In a centralised country like Malaysia, economic data are generated for national planners. What is a state like Penang to do? All is not lost. There is much to be learned from what is available. You just need to know how to interpret what’s out there.

Introduction

When reports say that the economy is growing at six per cent, this number is the change in the real (i.e. adjusted for inflation) gross domestic product (GDP) over a one-year period. Since the population in Penang grows at more than two per cent a year, real GDP has to at least outpace this yearly increment if overall welfare levels are to improve over time.

The GDP is obtained by assembling the four subaccounts: production (how much is produced?), appropriation (how much is consumed?), accumulation (how much is saved and invested?) and the external sector (how much is bought and sold across the border?) that make up the country’s system of national accounts or SNA.


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