Better economy won’t lower cost of living, say experts

MALAYSIA’S economy is heading in the right direction but this will not alleviate the high cost of living, economists said.

The Statistics Department said that Malaysia’s GDP will expand by 5.8% in the second quarter of 2024, which the economists said was a positive sign for the economy.

Chief statistician Datuk Seri Mohd Uzir Mahidin said the estimated growth for the second quarter was in line with the latest indicators such as the industrial production index, which rose 6.1% and 2.4% in April and May 2024 respectively, compared to the previous year.

The Statistics Department said the GDP is estimated to have increased by 5% in the first half of 2024, compared to 4.1% in the same period last year.

Prof Barjoyai Bardai, however, said the people would still have to endure a high cost of living.

The academic at the Al-Madinah International University added that if Malaysia wants to sustain its current economic growth, it has to increase its productivity.

“It is a good sign for the country and the economy but whether it will fulfill consumers’ hope is another question,” he said.

“The increase in GDP does not mean that our cost of living will decrease – in fact, it may increase.

“Malaysia can continue to grow if productivity is improved.”

Prime Minister Datuk Seri Anwar Ibrahim commented on the estimated growth, saying that he was surprised with the improvement.

“This is outside the projections presented by all parties. I thank the people, professionals, and investors for their hard work. This will give us the opportunity to rise as a strong nation,” he said in a video posted on social media on Saturday.

Anwar added that the Madani government promises better jobs, better training, and better technology towards a digitalised and energy-transitional way of life.

“I am confident that with our cooperation and focus on economic development, we will succeed,” he said.

Agreeing with Barjoyai was Ahmed Razman Abdul Latiff from the Putra Business School, Universiti Putra Malaysia.

Razman said the current situation is driven by two factors – the increase in economic activity and the import-export factor.

“People are spending and buying more. Trading is happening online and offline. Another reason is that our exports are high but our imports are also high,” he said.

“So we need to empower our domestic trade so that we don’t depend too much on imports.

“To empower our domestic trade, we need a fiscal strategy. For example, with the rationalisation of diesel subsidies, make sure the money goes to the household or give business incentives to business owners.”

Asked what Malaysia can do to sustain its current economic performance, the academic said the government could introduce a progressive wage policy and increase the minimum wage.

Back in April, the Statistics Department said the country’s economy is forecast to have grown by 3.9% in the first quarter of 2024. – July 24, 2024.