The maths behind Putrajaya’s calculation to hit a RM3.4 trillion nominal gross domestic product in 2030 is wrong, claimed former prime minister Najib Abdul Razak.
According to the Shared Prosperity Vision 2030 (SPV2030) policy outline, the target will be hit if the country’s GDP grows at an average growth rate of 4.7 percent annually from 2021 to 2030.
However, Najib, in a Facebook post, said this was simply inaccurate and that growth would have to be at an average of 7.36 percent annually to hit the target.
This is as GDP at the end of 2018 was RM1.45 trillion. At the given rate of 4.7 percent, he said the GDP would only be at RM2.53 trillion by 2030.
Najib used a compound annual growth rate formula to show that Putrajaya’s maths was wrong.
Two days ago, when the SPV2030 was not made public, the Malaysian Institute of Economic Research also pointed out that GDP would have to grow between 6 to 8 percent to hit the 2030 target although it was not clear what the target was at the time.
Malaysiakini has double-checked the maths and found that the calculations made by Najib to be correct.
The World Bank estimates that Malaysia’s GDP growth for 2019 to be just at 4.6 percent.
China, which is among the world’s fastest-growing economies, last hit double-digit GDP growth in 2010.
Since then it has been steadily declining with its 2018 GDP growth at 6.9 percent.
There is an argument to be made that there are different figures for real and nominal GDP estimates.
In simple terms, real GDP adjusts the nominal figure to account for inflation or deflation.
However, quarterly nominal GDP figures indicate that for Malaysia, there might not have been a significant difference for 2018.
Thus, the 4.7 percent growth target will still not result in a GDP of RM3.4 trillion in 2030.