By Salahuddin Hisham
ASK 10 economists to comment on the latest release of any economic data and you are likely to get 10 different views. Such is the nature of a non-definitive social science discipline of economics.
If they concur on a positive snapshot of the economy, they will fiercely differ on the “going forward”. There will be the usual optimists, the pessimists and also the majority safe forecasters predicting that existing conditions will remain the same with no change in the near future.
And, the favourite caveat of economists to cover when things do not happen as expected is the Latin term, ceterus peribas (“other things equal”). It means they did not make any mistake but that the variable changed.
The fact could be clear and precise as there are numbers and data. However, the interpretation will still be subjective to each individual economist or analyst’s assessment. They could be guided by their school of thought.
Over the years, the various economics of thought have their own political leaning. Naturally, certain political party will champion economic theories that fit in with the economic and social interest within the demography of their supporters and voters.
Politics is the game of numbers. As the saying goes, politics is about perception. So one can expect the interpretation of reports to get spun.
The latest semi-annual World Bank economic report underwent that phenomenon.
A report is basically documenting what has happened and an increase in GDP growth from 4.2 per cent for 2016 to a forecast of 5.4 per cent for 2017 for the Malaysian economy would be considered encouraging.
However, a news report by a financial daily magazine with a left leaning political affiliation highlighting the “pockets of risk” got the establishment upset. The justification to amplify would likely be due to the lower growth of 4.8 per cent for 2018 amid a flat average growth rate for ASEAN at 5.2 per cent for 2017 and 2018.
This was about the ongoing adjustment to the rising cost of living. It is viewed to weigh on private consumption. In simple terms, the policy changes and GST will affect consumer amid a high level of household debt.
The World Bank forecast showed private consumption rising from 6.1 per cent for 2016 to 6.6 per cent, 6.5 per cent and 5.9 per cent for 2017, 2018 and 2019, respectively. It seemed steady and the concern for a drop is in the years ahead.
Another issue highlighted was the worry over budget deficit and government borrowing. The budget deficit vis-à-vis GDP for 2016 is 3.1 per cent and dropping to 3.0 per cent, 2.8 per cent and 2.7 per cent for 2017, 2018 and 2019, respectively.
At below 5 per cent and debt-to-GDP remaining below 55 per cent, what then is the beef?
They quoted the World Bank Chief Economist for Malaysia, Richard Record who had voiced his concern over the vulnerability of our open economy and low commodity prices. His suggestion is to undertake further tax reform and reducing exemption from GST.
That is nothing that Malaysian economic planners are unaware of. The tax reform is already in progress and tax collection by Inland Revenue Boards and Royal Customs is on the rise and will keep rising. However, it needs be done judiciously and wisely.
Highlighting it comes off as rather cheeky of this left leaning financial daily. Hope it is sincere and not a political trap.
World Bank Country Manager Faris-Hadad Zeros attributed the slight pessimism in their report for 2019 to an expected slowdown in advanced economies and China. Frankly, it is not a significant comment and Malaysian economic planners would have anticipated that.
If the intention of the financial daily is politically motivated, it is part of the opposition’s China fear propaganda. It should not be politically worrying since PKR-led Selangor sent a delegation led by Menteri Besar Dato Azmin Ali to China last month.
The part that made the establishment upset was the extra spin done by a certain news portal.
Supposedly it is a letter to the editor from an anonymous reader. The published letter brushed the World Bank report as bad news despite the World Bank website link given hardly mentioned any negative views of Malaysia.
If the forecast is for a slowdown of GDP for 2018 and 2019, the rate of around 5 per cent is still decent. What more when compared to Singapore’s GDP forecast of between 2.0 per cent to 2.6 per cent?
Then there was the comment about Malaysia not reaching the trillion dollar economy as per the larger populated neighbours. Singapore’s 2016 GDP of US$297 billion is far from a trillion dollars.
The proper way to see it is the GDP per capita. Malaysia is far higher than highly populated Indonesia and Thailand.
The political motivation is obvious when the reader described youth unemployment having skyrocketed to 12.1 per cent. How could it be described in such a manner when global average is 13.56 pr cent and average for the OECD countries is 14 per cent?
Youth unemployment is a snag locally and globally, but it has to be seen in the proper perspective by comparing to other figures.
To accuse the financial daily and news portal of committing economic sabotage, it is an emotional response. But, when negativity is widely propagated, it could ricochet back to the economy and be a self fulfilling prophecy.
The World Bank report mentioned positively: “Malaysia is expected to grow more rapidly, reflecting improved confidence, higher investment, and the recovery in world trade.”
It proves the long-term steps taken to undertake transformation is paying off.
How Malaysia could be said to have debt problems when the World Bank report mentioned: “Several governments have succeeded in reducing fiscal deficits in 2017, notably Mongolia and Malaysia, but deficits remain high or are on track to increase in many others.”
This remark from the World Bank website should conclude their report: “The Malaysian economy is progressing from a position of strength.”
Differences in opinions are not discouraged but encouraged in any economic discussion. The varied views only strengthen the understanding and helped formulate the right policies in facing up to challenges.
However, it cannot be based on irresponsible fake news and unsubstantiated spinning. If the motivation is political, and it is not such a bad thing, promoting a view based on fake news is an act of deception on voters. It has to be implored on.
As BN Strategic Communication Director Dato Abdul Rahman Dahlan summed it in his statement:
“This is the true record of the Government under the leadership of Prime Minister Najib Razak. All Malaysians should be proud of that economic record. All those who lie about it for political ends should be ashamed – for they shame their country and their fellow Malaysians. Their fake news does not stand up to the scrutiny of what global institutions say about Malaysia. They know that this Government has an economic plan – and the plan has delivered and is continuing to deliver for the benefit of all Malaysians. “
To sum the World Bank report, it bears testimony to the past effort of the current administration to reform the economic structure.
What was done in the past is bearing fruit and in the long run, it is fair for the people to expect better things to come.
That should be what matters to the common folk.