Sunday, October 5, 2014


We were informed that the Gross  Domestic  Product (GDP)  of Malaysia recorded a growth of 5.2% and 6.3 % for the first half of 2014. Some are happy about this growth but  there are some  who argue that what has  the GDP growth has to do with my quality of living?

A growth in GDP evidently shows that Malaysia is on the right track in managing the economy to provide an improved and a better quality of life to all Malaysians.

Generally speaking, GDP is about how the  economy of a country perform. GDP is measured by taking into account the expenditure, type of economic activity and income of a country.

Expenditure refers to consumption, investment, government spending and net exports. While, Consumption refers to what people spend their money on- food, petrol, , services such as dressing, visits to doctor, making calls,  whatsapp,  and so on. More consumption means more money is circulating in the economy.

Investment linked to investments by local and foreign investments  which creates job opportunities for Malaysians. Government spending refers to investments to provide a better  facilities for people .

Yet there are some who argue that the Malaysian GDP grows but their income level remain stagnant and they cannot cope up with the rising cost of  food and other necessary items!. 

But the statistics on income level of Malaysians  proved otherwise. There is an increase in income level of all Malaysians. The Malaysian wages has increased, with the wages to GDP ratio,  improving from 29.3% in 2008 to 33.6 % in 2013. The increasing ratio of wages to GDP means that people are now paid more for their productivity than they were in 2008.

To prove this point, let us examine the The Household Income Survey conducted by the Department of Statistics in year 2012. The survey   shows that the average household income was RM5,000  per month whilst the median income was RM 3,626 per month. But now it is reported that the average household income has increased to RM5,919 whilst the median income has risen to RM4,258 per month,  a growth of 8.2 %. That means the top 60 % of the Malaysian household  earn an income more than RM 4,000 per month.  The average income of Malaysian in year 1970 was only RM 264. There is a quantum leap in our income level since then.

Yet, some claim that the rise in cost of living has out outstrips the wage increase . The incomel level remain stagnant. To verify this claim, let us examine the Malaysian Comsumer Index , which shows the price increase compare to the buying power. For the first seven months of 2014, the Consumer Price Index (CPI) averaged 3.3 % per annum, which  means the rate of growth of household income (8.2 %) has  exceeds the increase in the price of goods.

This statistics evidently shows that the Malaysians are now enjoying not only  a higher purchasing power, but also a greater power of choice. With increse in their income, Malaysian now has choice to buy  their daily necessities at their choice. For an example :  A Malaysian has a choice to buy a kilogram  of grapes for RM 17.90 from Village Grocer in Bangsar Village  or to buy  it for  RM 8.49 per kilogram  at Aeon Big in Bangsar South!  

GDP of Malaysia reflects the growth of Malaysian economy, an improvement in wages and a better quality of life of all Malaysians. 

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