by SHAZNI ONG/ pic by TMR
THE Economic Affairs Ministry (MEA) yesterday clarified that the target for Malaysia’s GDP to reach RM3.4 trillion by 2030 under the Shared Prosperity Vision 2030 (SPV 2030) was made on nominal (or current) price that took into account inflationary effects.
This comes after former Prime Minister Datuk Seri Mohd Najib Razak earlier claimed that the government had miscalculated the RM3.4 trillion GDP growth target. In a Facebook post, he stated that Malaysia would need an average GDP growth rate of 7.36% annually to reach RM3.4 trillion by 2030, alleging that 4.7% would only result in a RM2.53 trillion economy by then.
Economic Affairs Minister Datuk Seri Mohamed Azmin Ali (picture) pointed out to Najib’s “confusion”, clarifying that the official figures would correctly result in the projected economic value.
“@NajibRazak confused about calculations for GDP growth target between 4.5% and 5% at constant price that result in GDP of RM3.4 trillion (calculated at nominal/current prices) by 2030,” Azmin tweeted on his official Twitter account yesterday, before citing the ministry’s statement.
The MEA in a statement said the GDP measurement is either measured in nominal/current, or by constant (or fixed) prices, which the latter does not take into account the impact of inflation rates, and therefore, reflects an increase in the added value/actual output.
The MEA said, typically, GDP values are expressed at nominal price while the GDP growth rate is expressed in constant price.
“Hence, to reach the GDP goal of RM3.4 trillion by 2030, the GDP needs to grow at a constant price of 4.7% per annum between 2018 and 2030, with an average inflation rate of 2.3% for the period.
“Or in other words, the GDP target of RM3.4 trillion can be achieved with an average growth in nominal price of 7% per annum for the period between 2018 and 2030,” the ministry said.
The MEA added that the SPV 2030 document had clearly distinguished the figures according to the nominal and constant measurements and was also in line with Azmin’s remarks following the launch of SPV 2030.
According to the SPV2030 policy outline, the target will be hit if the country’s GDP grows at an average growth rate of 4.7% annually from 2021 to 2030