Base on the article that we got is talking about “WORLD BANK RAISES MALAYSIA’S GDP GROWTH FORECAST” which is related to the chapter 1. The article is talking about the world bank raises the expectation of Malaysia’s GDP due to the growth rate is growing higher than previous expectation. Based on our knowledge, Gross domestic product (GDP) is the market value of all final goods and services produced within a country in a given period of time. GDP measures two things at once which is the total income of everyone in the economy and the total expenditure on the economy’s outputs of good and services.
From our knowledge, we can know Malaysia’s consumption, investment, government purchase and net exports are increasing, it also showed the economy of Malaysia is improving. Consumption is one of the major components of GDP. Consumption increase showed the Malaysian have more purchase power and ability to buy things. It also showed that when the economic conditions of a country are good, people will tend to increase their consumption. Next, one of the major components of GDP is the investment.
It is an expenditure by firms and households spending buy new buildings, capitals, machines and others. The more investment showed the companies bring in more capital to enlarge their businesses. From the article, we can found out the foreign investor bring in their capital investment in Malaysia, it has raised Malaysia’s GDP growth rate. Next, Government purchases are important to GDP which include spending on goods and services by local, state, and federal governments. It includes the salaries of government workers and spending on public works. It showed the sales of local goods and services are increasing. Next, one of the major components of GDP is net export. It is referring to the value of a country’s total export minus the value of its total imports.
It is spending on domestically produced goods by foreigners. It is also used to calculate a country’s aggregate expenditures.DiscussionFrom the article that we found, the world bank has modified Malaysia’ GDP growth forecast increase twice in this year to 5.2%, due to the foreign investors, local company investments and the recovery in world trade.
In fact, Malaysia’s strategic location and competitive position make it an attractive for foreign companies. Furthermore, China has been Malaysia’s largest trading partner since 2009, and Malaysia is China’s largest trading partner among the 10-member Association of Southeast Asian Nations (ASEAN). Due to foreign companies, Malaysia’s GDP has been increasing year by year. For example, Malaysia’s exportof petroleum products, electronic circuits, chemicals and chemical products, as well as optical and scientific equipment to China, had contributed to the higher trade figure. For investment, China’s companies and investor they bring in their technology and capital invest in Malaysia. For example, Chinese developer Country Garden is building a huge new city in Johor which is Forest City and the cost of the project is 100 billion US dollar.According to the economic report, the World Bank has raised Malaysia’s GDP growth forecast from 4.9% because of the domestic economic activities increase by 5.
7% year-on-year before the year end of 2017. In April, East Asia and Pacific Economic had predicted the Malaysia economy to increase by 4.3% in 2017. In addition, Malaysia’s GDP growth so fast it is because of the government purchases and strong expenditure of private enterprise.
The external demand made some improvement also.Richard Record, who is a World Bank Group lead economist. He has mentioned the improved of the consumption secure the labour market conditions and consumer feel more confidence to the market. Besides, the investment also grows rapidly in the first half of 2017, it reflects the capitals of manufacturing and services is increasing. He stays positive and bullish on the Malaysian economy’s performance as Malaysia’s economy continues growing rapidly year-by-year. Therefore, he also expected the consumption, investment, government purchases and net exports will be growing.
After that, economists are taking a positive outlook on Malaysia’s economy for a future period of time, supported by the increases in private consumption and private investment. The International Monetary Fund has upped the expectations of Malaysia’s GDP growth from 4.5% to 4.8% by according the latest world economic report. According to the World Bank and others professional economist predictions, Malaysia’s GDP will continue the momentum increasing in 2018 and 2019.ConclusionIn summary, we can conclude that the consumption, investment, government purchases and net export are linked together with GDP in the sense of macroeconomic factors which are used to gauge an economy.
When the components of GDP increase, it will directly affect the GDP which is going to increase. Last but not least, Malaysian should be keeping the momentum to improve our economy so we can achieve the “WAWASAN 2020”.