Malaysia’s GDP Growth Masks a Dark Truth

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The economy is growing, yes, but fuelled by rising household debts rather than productivity.

The World Bank and the International Monetary Fund (IMF) have increased their projection of Malaysia’s GDP growth this year to 5.2% and 4.8% respectively. This is due to the unexpected GDP surge of 5.7% in the first half of 2017.1

Government officials saw this as proof that the economy is going strong. Prime Minister cum Finance Minister Datuk Seri Najib Razak credited the growth to the federal government’s massive projects, such as the construction of the MRT, the East Coast Rail Link and the Pan Borneo Highway.2

Under normal circumstances, GDP growth signals economic progress and is indicative of the increase of wealth. However, that is not the case here, and for two reasons: first, the average inflation rate for the first six months in 2017 was 4.1%.


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