Malaysia’s economy in 2050? Here’s what PWC’s analysis says

You know, sometimes it’s tiring to explain to people who keep saying that Malaysia is rotten to the core simply because they hate some politicians. They should remember that there are so many good people and great Malaysians who continue to work hard. This is why Malaysia is still growing. Anyway, the below is NOT from me. It’s from a huge brand with lots of good people; PWC. Full report is here: World in 2050 by PWC Some comments about Malaysia are inside but there’s one whole commentary box dedicated to some fast growing economies. The below is for Malaysia.  If you would like to read about other countries, do click here: World in 2050 by PWC   For example, the Philippines, Vietnam, Thailand and Indonesia… they are all within ASEAN. 🙂 

— start of PWC commentary —

We retain our view from the January 2013 edition of this report that Malaysia’s growth rate has the potential to perform even better than the model results, which already show relatively healthy average real GDP growth of around 5% per annum up to 2020 and around 4.2% average annual real growth over the whole period to 2050.

Our view has been strengthened by a few key developments since the January 2013 edition.

First, the Malaysian government has taken concrete steps to strengthen the public finances, which is important for long-term sustainable growth.

Specifically, in the most recent Budget 2015, the government reaffirmed its commitment to fiscal consolidation and reform. The Budget confirms the introduction of GST which, combined with subsidy rationalisation, is expected to raise the government’s operating budget surplus. This creates a broader tax base to support the government’s growth agenda.

Second, the implementation of initiatives to overcome key growth constraints is progressing successfully. These initiatives range from infrastructure investment to human capital development.

The Klang Valley MRT project is progressing well and, when operational, should deliver significant economic benefits through traffic congestion alleviation. Increasing the ability of workers and residents to move around the capital city more efficiently results in greater connectivity, creating deeper markets for people and ideas and thereby enhancing productivity.

Budget 2015 also signalled a strong commitment to developing human capital and entrepreneurship. Malaysia has great potential to benefit from the demographic dividend and recent measures demonstrate that it is on the right track to realise this potential through investment in job creation, improving education, enhancing the quality of labour, encouraging savings and developing a more inclusive economy. Our initial analysis suggests that this demographic dividend can last up to two decades.

Third, the reform agenda to create a better business environment continues apace.

The World Bank in its latest report confirmed that the government’s efforts and commitment to enhancing Malaysia’s business environment is on the right track. Malaysia has improved its ranking from 20th in 2013 to 18th in 2014. The latest study finds Malaysia as the second highest ranked ASEAN country in the index. Our own 2014 Escape Index also shows Malaysia as one of the best performing emerging economies on a range of economic, social, political, technological and environmental indicators18.

Last but not least, greater ASEAN integration and proposed trade deals with China and other Asia-Pacific trade partners will enhance Malaysia’s ability to benefit from these global growth engines.

Malaysia is favourably located in the middle of a $2 trillion+, 600 million+ person ASEAN market and in between China and India, the two most significant drivers of future global economic growth. Malaysia’s goods exports to BRIC countries have increased at an average rate of around 15% per annum over the 2000-13 period, much faster than the average for exporters to these countries. Following the greater ASEAN economic integration that is expected by 2016, Malaysia is poised to benefit further from its geographical position as well as its highly developed logistics and trade infrastructure.

This is recognised by global investors, who (aside from a sharp dip in 2009 due to the global financial crisis) have steadily increased their capital inflows to Malaysia over time as the chart below shows.

Chart by PWC

— end —

Thanks for reading and understanding. Anything that you disagree, feel free to write to PWC yeah.

Next suggested article: It’s always about competitiveness or nothing left

Advertisements

One thought on “Malaysia’s economy in 2050? Here’s what PWC’s analysis says

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s