Macroeconomic Performance of Malaysia: Output, Labor Market and Price Level

Running Head: ECONOMICS ASSIGNMENT
Economics Assignment
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1ECONOMICS ASSIGNMENT
Table of Contents
Introduction......................................................................................................................................2
Production output performance.......................................................................................................2
Real GDP.....................................................................................................................................2
Real GDP growth rate..................................................................................................................4
Real GDP per capita....................................................................................................................4
Government measures to achieve production output...................................................................5
Labor market performance..............................................................................................................6
Unemployment and its type.........................................................................................................6
Type of unemployment in Malaysia............................................................................................6
Government measures to overcome unemployment....................................................................8
Price level of Malaysia....................................................................................................................8
Inflation and its causes.................................................................................................................8
Inflation trend and cause of inflation in Malaysia.......................................................................9
Government policies to stabilize price level..............................................................................10
Conclusion.....................................................................................................................................11
Reference list.................................................................................................................................12

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Introduction
In Southeast Asia, Malaysian economy is the fourth largest economy. In the world
economy, Malaysia ranks 38. Labor productivity in Malaysia is considerably higher as
compared to the neighboring nations. High productivity of the economy is contributed from
adaption of advanced technology and presence of high technology intensive knowledge based
industries. The global competitive report of 2017 suggests Malaysia to be the 23rd most
competitive nation in the world for the period 2017-18. Agriculture in Malaysia now has
become a minor sector contributing only 7.5% of the GDP. Agriculture now employs only 11.1%
of the labor force as against 66.25 in 1960 (Jomo, 2016). The agriculture production has also
now shifted to industrial crops such as palm oil, rubber from food crops such as paddy and
coconut. Industrial sector in Malaysia contributes 36.8% of GDP. The sector employs 36% of
total labor force. The three main industries of Malaysia are Electronic industry, Construction
industry and automotive industry. Finance and Banking is the main service sector of Malaysia.
Other services of Malaysia include tourism, medical tourism, oil, gas, and others. Malaysia is
one of the major trading hub in Southeast Asia. Malaysia is the largest producer of rubber, tin
and palm oil. Some of the world’s largest companies operating in Malaysia are Maybank, Tenega
Nasional, CIMB Group, Public Bank Berhad, Sime Darby, Axiata Group, Maxis and IOI Group.
Production output performance
Real GDP
Gross Domestic Product is a macroeconomic measure of aggregate output. It expresses
value of domestically produced goods and services in monetary terms. GDP is a quantitative and
obtained from summing up value of all goods and services. It is quantitative measure where

3ECONOMICS ASSIGNMENT
values of goods and services are obtained from multiplying quantity of produced goods with
their respective market price. Now, in computing GDP two types of market price can be used.
One is current year market price and other is market price of a constant base year. GDP obtained
using prices of current year gives nominal GDP while GDP obtained in constant base year prices
is called Real GDP (Agénor & Montiel, 2015). Real GDP provides a more accurate measure of
aggregate output as it is free from price effect. If not adjusted for prices, then GDP might
understate or overstate values of output price level changes overtime.
Figure 1: Real GDP of Malaysia
(Source: tradingeconomics.com, 2018)
The figure above shows trend in real GDP of Malaysia in the last ten years. This indicates an
overall rising trend in real GDP. In the first quarter of 2018, GDP at constant prices decreased to
MYR 295288 million from MYR 308078 (in million) in the last quarter of 2017. The real GDP
averaged MYR 211429.11 million between 2005 and 2018. The highest GDP of MYR 308078
million in 2017. The recorded lowest GDP of MYR 130630 (in million) was recorded in 2005
(tradingeconomics.com, 2018)