World Bank’s new 🇲🇾 economic report is out:

TLDR?

No gloom, but no gloss either:

1. 2025 was resilient, 2026 to be restrained at 4.1% growth

2. 🇲🇾's Electrical and Electronics (E&E) sector most exposed to future US tariff + structural risks

3. Reform? Strategic necessity🧵 1. 🇲🇾's growth restrained by:

- Slowing global & regional momentum

- Fading +ive effects of export frontloading

– Softening biz confidence, pvt consumption, investment

This Merdeka, in a joint post with @fionne_lim12, some reflections on 3 unsung wins of Msia’s economy that should make every M'sian proud:

1. Arresting abject poverty

2. Escaping the resource curse

3. Developing a world-class halal economy

🧵 1. Poverty

Around 50-in-100 M’sians were poor a decade or so after Merdeka

Today, it’s about just 6-in-100

That's over 14m M'sians lifted out of poverty

While the fight to bring it down to zero continues, this is remarkable, esp in the historical M'sia - S'pore context...

More on World Bank's growth upgrade for M'sia 🇲🇾

1. Higher growth is translating to better living standards (in macro sense)

2. Paired with stronger ringgit, high-income goal is within reach (~2028)

3. But challenges remain. In this thread, I’ll dive into under-employment🧵 Higher growth only means something if it leads to better living standards

For that, economists look at GDP per capita, after controlling for inflation

Good news: Msia’s real per capita output is now ~12% higher than pre-Covid ... and ahead of all ASEAN countries (excl SG)

🧵We just released our World Bank high income (HI) data

How did M'sia do?

> M’sia to reach HI by ~2030

> Projection most sensitive to US$/RM rate

- eg, if US$/RM was just-under-4 btwn 2022-24, 🇲🇾 would be HI *this* year

> Sarawak retains HI status. New entrant? Selangor!🧵

# 1. M’SIA REMAINS UPPER-MIDDLE INCOME FOR NOW 

but could reach HI by 2030 if:

-US$/RM rate ~RM4.7
-Avg growth rate ~4%
-Inflation’s constant near long- term rate ~2%

Impt to emphasize that faster reforms can speed up transition

Our (World Bank) headline take on the M'sian economy

1. GROWTH: 4.3% for 2024; shade < regional avg of 4.5%

2. JOBS: Migrant workers crowd-in jobs for M'sians. Real problem for M'sians? ~4-in-10 M'sians work < skill levels

3. POVERTY: ~16k families still s.t. hardcore pov
🧵 Let's talk GROWTH:

Consumption -- not so much investment -- to drive 2024 growth of 4.3%

In fact, both public & pvt investment LOWER post-pandemic than pre-pandemic (fig)

We're hopeful that NIMP implementation will accelerate investment

Why M’sian FDI stats can be tricky to interpret:

Tldr?

1. MIDA, DOSM, BNM stats on FDI measure different things

2. Figuring FDI "trends” is tricky 'cos FDIs are volatile

3. Pinning down country of origin is tricky

Also, FDI metrics are arguably over-emphasized in M’sia 🧵

https://twitter.com/ApurvaSanghi/status/1763130706631549391

MIDA releases “announced" FDI, which can be *multi-year*, ex, ~$5.4b Infineon investment in 2023

whereas

DOSM measures actual FDI numbers, *annually*

&

BNM does it for BoP purposes

But difficult to x-check these multiple sources to figure out how much announced --> actual

Drum roll for one more candidate contributing to poor Malaysia's less-than-desired implementation culture

It may sound boring but it's as important as peanuts are for nasi lemak

And it's a lack of culture of independent monitoring & evaluation🧵

https://twitter.com/ApurvaSanghi/status/1659405605726040065

Now, development's a game of snake & ladders. So by all means, experiment

In fact, earmark some $$$ for ministries to "innovate & fail" for ex, as Peru’s Ministry of Education did in 2014 (and improved its performance in PISA scores)!

But...

Some more on MYR/USD hitting 4.8

TLDR

1. USD, China matter but partly

2. MYR weak 'cos of long-term decline in 🇲🇾 competitiveness

3. If you want to lose weight, you develop good habits first. Weight takes care of itself. Address this decline & MYR will take care of itself🧵

https://twitter.com/ApurvaSanghi/status/1759899155919671437

The USD factor:

Sure, USD affects MYR

But PHP, VND, IDR, THB – have all depreciated less than MYR since the last US rate hike (fig)

MALAYSIA:

- Inflation’s down
- Growth’s decent
- Jobs have returned

So why do people still feel glum?

Some more thoughts inspired by this pointed question posed to me on @KeluarSekejap

IMHO, it boils down to these 3 “I”s:

- Inflation
- Income
- Inequality

🧵 1. INFLATION

“Inflation is slowing” is like saying “bleeding is slowing”

Falling inflation doesn’t mean falling prices

It just means prices are rising less fast -- but they’re STILL rising

Even mighty leaders stumble over this:

https://twitter.com/joebiden/status/1730247565537390998

In the @keluarsekejap podcast, I shared a startling statistic how “learning poverty” in M’sia is 40%!
 
Here are 3 elaborations on that from our report “Fixing the Foundation” 🧵
 
But also 3 Qs for *YOU*, and I’d be most grateful for your responses 🙏🏽 #1. 42% of 10-year-M’sians couldn’t read / understand an age-appropriate text -- what we dub “learning poverty”
 
—> Compare this to just 3-4% in Japan, Korea, Singapore!

#2. About 14% of M’sian students surveyed said their teachers are “often absent”
 
—> Compare this to just 1% or less in China (Shanghai), Japan, Korea!

#3. Only ~50% of English language teachers in M’sia are sufficiently proficient in English to teach it

“Will the M’sian ringgit slide to 5.0 against the USD”?

“MYR hits new low of 3.5 against SGD. Why is SGD not weakening”?

“Why aren’t high oil prices boosting MYR”?

My take on Ringgit woes:

TLDR? 3 takeaways👇🏾 1. Sure, high US interest rates matter. But domestic policies matter too which are for GOVT to fix (not BNM)

- MYR vs SGD comparison is incorrect

2. High oil prices DO support MYR but effect can be muted by other factors

3. MYR value is NOT only metric of economy’s strength

The M'sian economy's sensitive to global growth. But

-How sensitive?
-Sensitive to whom?
-Is there a bright spot?

Elvis sang "We're caught in a trap"

Had he made it as an economist (!), he'd sing today:

"We're caught in a low-growth, low-investment, low-cooperation trap"🧵 - Low growth: We project 2023 global growth to fall by about a THIRD from 2022

- Low investment: High inflation in US/EU --> high interest rates --> LESS investment, globally

- Low cooperation: ~3,000 NEW restrictions imposed on global trade last year.

We're all shook up!

How is Malaysia's FDI holding up? Hits, misses & thoughts on 🇲🇾's investment story

HITS
M’sia ranked #23 globally in 2022, receiving a RECORD $17b of FDI *net* inflows

Nerdy PS: "net" = net of capital repatriation & loan repayments and hence better metric than "FDI inflows"🧵 Within developing countries, M’sia also attracted the:

- TOP project in telecoms: YTL Green Data Center

- 2nd TOP ranked one in agri-food: FGV Dairy Farm

Bravo!

My thoughts on @StatsMalaysia recent wage data launch

Kudos to DOSM for shedding much-needed light on Malaysia’s formal wage distribution

But the overall picture may be a bit incomplete

https://twitter.com/lamkanahraf/status/1687317099935571968

1. UNDERCOUNTING: Malaysia’s total work force is ~16m. Prima facie, the 6.45m formal workers are ~40%. But this 6.45m misses out on some formal workers. Why?

Because only those civil servants under EPF (vs KWAP) are counted as part of the 6.45m. But we don’t know the split

Is Malaysia RICH or WEALTHY?

What’s the difference?

Let's start with you. Are YOU rich or wealthy?

Read on...🧵 Think of your paycheck. Fatter it is, RICHER you are

Now think of your assets like your house, car, bank acct etc. More assets you have, WEALTHIER you are

See the difference? Now, you can be rich w/o being wealthy but that may not last

BOTH income & wealth matter!

As the World Bank economist for M’sia, I get to weigh in on, um, weighty issues such as the economy; geo-econ-politics; climate change etc.

But 2day, I want to spotlight something that doesn't get much attn yet affects EVERY Malaysian

And that is fragmentation of govt programs Not sure if the rakyat is aware but Malaysia currently has
- 17 agencies providing 170 social assistance programs,
-over 70 agencies for skills training, and 35 agencies for SME digitalization.
- Over 30 agencies provide “investment promotion” services

This is my last thread for a while, and as promised, on the cost-of-living (COL)

Malaysia’s rising COL is solvable. It needs action on 3Ms:

- Macro (fiscal)
- Meso (firms)
- Micro (families)

But b4 anything, pls allow me 2 tell you abt Izwan, a 5-star rated @GrabMY driver... ...Izwan (who allowed me 2 kindly share his story) drove me to Putrajaya on Feb 6: a public holiday

He's a father of 5. Was a Petronas contractor; now btwn jobs.

@GrabMY is his lifeline. But he struggles 2 make ends meet, and cuts down on small luxuries such as eating out...

Congrats! Malaysia to officially grow at 8.7% in 2022!
 
But why the disconnect btwn high growth rates & how rakyat feels on the ground?

3 reasons: 1. Real incomes per capita matter more than growth rates per se.

To elaborate:

Faster growth rates lead to higher income levels. That’s good.

Incomes, after all, are what we spend & save.

But impt. to adjust incomes for popln size & inflation…

How's the M'sian economy doing? Our World Bank take on headline macro:

1. M’sia’s 2022 growth among HIGHEST in E. Asia
2. Recovery BROAD-BASED
3. 2022 Govt revenue HIGHER vs 2021
4. Inflation coming DOWN
5. Un- and under- employment both going DOWN

All true headlines BUT... ...looking Behind-The-Scenes (“BTS”) paints a different picture. With apologies to K-pop fans, here’s the BTS take:

Headline #1: “2022 growth among highest in E. Asia”

BTS: Consumption & exports drove this growth. But M'sia did something that others didn’t:

EPF withdrawals!

My quick thoughts on Malaysia’s economy based on our (World Bank) latest assessment. Spotlight on “GBR”, ie, Growth, Budget, Ringgit (and no, not Great Britain, which is a different kettle of fish)!

Let’s start with growth…1/ We UPGRADE our 2022 growth forecast for M'sia from 5.5% to 6.4%. Compared to our forecast for China (2.8%) and ASEAN-4 average (5.4%), M'sia looks pretty decent! And it is but maybe hold off on popping that champagne 'cos…2/

For the #ConcernedMalaysian, here’s our (World Bank) latest assessment of 🇲🇾 Malaysia’s economy in 10 figures & 20 tweets, incl on GST, min wage, inflation. Thoughtful criticism most welcome 😊 This is from the latest #MEM. Here goes: Growth is back, but you can’t eat growth! Firm sales back to pre-pandemic levels but household recovery is still uneven. 17% of low-income households continue to face food insecurity. So growth may be back but may not be felt by all.