KUALA LUMPUR (Feb 16): Finance Minister Lim Guan Eng said that clarity and certainty provided by the Government in recalibrating the economy towards high-quality growth played a role in hastening the country’s Gross Domestic Product (GDP) expansion.
The Malaysian GDP grew healthily at a faster pace of 4.7 per cent year-on-year in the fourth quarter of 2018 compared with the third quarter growth of 4.4 per cent year-on-year despite external challenges of the ongoing United States-China trade war.
“The strong growth relative to comparable similar-rating and similar-size peers is a strength that will help Malaysia keep its credit ratings high going forward,” he said in a statement here today.
On quarter-on-quarter basis, public investment rose 44 per cent during the fourth quarter.
“The positive development should be extended further in 2019. On top of that, Malaysia’s role as a neutral safe-haven for international trade has allowed exports to expand 1.3 per cent year-on-year during the fourth quarter after falling 0.8 per cent year-on-year in the third quarter,” he said.
As a result, Malaysia registered a current account surplus of 2.3 per cent of GDP for the whole of 2018.
In current prices for the whole of last year, the country’s exports of goods grew 6.7 per cent to almost RM1 trillion, while the trade balance increased by 22.1 per cent or an increase of RM22 billion to RM120 billion, the highest levels in Malaysian history.
On inflation, Lim said the headline inflation for 2018 averaged one per cent year-on-year, which was the lowest annual inflation rate recorded over the past nine years.
During the first four months of the year under the previous administration, inflation rate averaged 1.7 per cent year-on-year.
“In contrast, during the first eight months of the Pakatan Harapan administration, it dropped significantly to 0.6 per cent year-on-year. This signifies the positive effect of Pakatan Harapan’s policies on consumer prices,” said the Minister.
The Consumer Price Index data clearly shows the zerorisation of the Goods and Services Tax (GST) from June 2018 until August 2018 had led to a marked decrease in consumer prices.
Moreover, the reintroduction of Sales and Services Tax (SST) in September 2018 did not significantly lead to higher inflation in the subsequent months. For example, the inflation rate averaged only 0.3 per cent year-on-year in the first four months after the introduction of SST, but inflation averaged higher at 2.4 per cent year-on-year in the first four months following the introduction of GST back in 2015.
“This further reaffirms my previous statements about the reintroduction of SST not having as large an impact on rising prices as compared to the introduction of GST and strongly proves that the fear mongering by the opposition on higher inflation due to SST did not happen.
“While the Government has been successful in maintaining low inflation rates, we are aware and concerned about cost of living remaining high as experienced by segments of the population, especially among the B40 (the bottom 40 per cent household income group),” said the Minister.
Moving forward, the Ministry of Finance and the Ministry of Domestic Trade and Consumer Affairs have formed a joint ministerial committee to explore ways to further control the cost of living in Malaysia.
There is an urgent need to ensure that the lowest inflation rate in nine years of one per cent in 2018 is reflected in everyday prices and enjoyed by the people, especially the B40.
“The committee will work alongside the National Cost of Living Action Council chaired by the Deputy Prime Minister (Datuk Seri Dr Wan Azizah Wan Ismail) to ensure that the living costs of all Malaysians remain affordable and reasonable,” said Lim.