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 GDP expansion.
The GDP grew at a faster pace of 4.7 percent year-on-year in the fourth quarter of 2018, compared with third quarter growth of 4.4 percent, despite the external challenge 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 today.
On quarter-on-quarter basis, public investment rose 44 percent 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 percent year-on-year during Q4 after falling 0.8 percent year-on-year in Q3,” he said.
As a result, Malaysia registered a current account surplus of 2.3 percent 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 percent to almost RM1 trillion, while the trade balance increased by 22.1 percent 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 1.0 percent 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 averaged 1.7 percent year-on-year.
“In contrast, during the first eight months of the Pakatan Harapan administration, it dropped significantly to 0.6 percent 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 GST from June 2018 until August 2018 had led to a marked decrease in consumer prices.
Moreover, the reintroduction of SST in September 2018 did not significantly lead to higher inflation in the subsequent months.
For example, the inflation rate averaged only 0.3 percent year-on-year in the first four months after the introduction of SST, but inflation averaged higher at 2.4 percent 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 bottom 40 percent (B40) income group,” said the minister.
Moving forward, the Finance Ministry and the Domestic Trade and Consumer Affairs Ministry 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 1.0 percent 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 Deputy Prime Minister Dr Wan Azizah Wan Ismail to ensure that the living costs of all Malaysians remain affordable and reasonable,” said Lim.