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CURRENT ISSUES IN MALAYSIAN ECONOMY - Coggle Diagram
CURRENT ISSUES IN MALAYSIAN ECONOMY
Increasing of Public Debt
Malaysia requires RM16.2 billion this year and RM13.31 billion the following year to pay the principle and interest associated with 1MDB. However after settling RM13.31 billion, there is still a shortfall of RM23.04 billion that the government should make up with additional debt given the RM15.76 billion remaining in the 1MDB Asset Recovery Fund and the RM38.8 billion remaining debt as of February 28, 2022.
Government want to build Mass Rapid Transit 3 (MRT3) in which it will advantage those who use public transportation, assist in lowering our environmental impact, and assist in recovering the failing construction industry.
However, the project cannot be implemented yet because the government needs to find money to cover the remaining debt.
Inflation
The Federal Reserve raised the federal funds rate by a quarter of a percentage point in March 2022, and more rate increases are likely in the coming months. If US interest rates go up even more, short-term money is likely to leave Malaysia, which will weaken the Ringgit.
the Ringgit lost about 4 percent of its value. Even though this will make Malaysian exports more competitive, the effect may be lessened by a slowing world economy. A weaker ringgit can make Malaysia's inflation problems worse, and it also drives up the cost of imports.
Climate Change.
This is due to people recently are suffering from floods, landslides, droughts, deforestation, air pollution and rising sea level.
The inconsistent of climate change will lead to a degradation in economic growth.
Physical damage, loss of crop harvest, drop in productivity, vigor and others related to crop potentials are examples of direct and indirect effect of the extreme climate change. The impact of climatic stresses on crop productivity does affect agriculture industry in Malaysia.
Unemployment
Furthermore, the unemployment issue that occur among unemployed people will lead to the low purchasing power and this contribute to a lower output and lower spending.
According to Department of Statistics Malaysia, the number of unemployed people proceeded to declined in February 2022 by 1.3% (-8.6 thousand people) to record 671.8 thousand persons as against January 2022 (680.4 thousand people). This shows that the unemployment rate in January 2022 is higher than February 2022.
High unemployment shows that the economy is operating below full capacity and it is considered inefficient. It also will lead the output and revenue to become lower.
INTRODUCTION
Malaysian economic growth has been high in recent years, with a 5.4 percent average annual growth rate for gross domestic product from 2010 to 2018.
Malaysia has attracted tremendous attention as a result of its strong sustained economic growth and attempts to eradicate poverty. As a result, the country's economic and political status has strengthened, making it more appropriate for an emerging market economy.
According to the Atlas method, Malaysia's GNP per capita had nearly achieved the high income level by 2018, at roughly USD$10,460, up from USD$370 in 1970, making it the third highest income per capita nation in ASEAN behind Singapore and Brunei.
Malaysia has the highest incomeinequality in Asia according to the Gini coefficient methodwhich is one of indication of less inclusive growth.
It is widelyunderstood that high economic growth in Malaysia wouldresult in widening economic disparity in various dimensions such as regional inequality and income group's gaps.
This indicates that less developed states and disadvantaged income groups do not enjoy from high economic growth compared to the developed states and high income groups, in term of economic growth at the national level.
CONCLUSION
In general,Malaysia has been progressing well in achieving inclusivegrowth while income inequality existed between states, ethnicsand income groups.
focus on economic areas, we have attempted
to examine the impact of innovation on inclusive growth
to investigate how banking risk, trade and financial development could impact inclusive growth
to explore the role ofhuman capital in capital flight and inclusive growth
to illustrate the impact of commodity price shocks on income inequality and the role of fiscal policy in ensuring inclusive growth.
Some policies are proposed to achieve inclusive growth, including the promotion of intellectual property rights for small businesses to spur innovation.
Ensuring a strong banking sector for wider financial inclusion, upskilling low-income workers to reduce the impact of globalization, ensuring stable commodity prices through increased domestic demand
Strengthening fiscal policy through increased revenue sources and the effectiveness of pro-poor spending programmes