PETALING JAYA: The economic affairs ministry has clarified former prime minister Najib Razak’s accusation that it had erred in calculating the annual gross domestic product (GDP) growth needed to hit the RM3.4 trillion GDP target in 2030, as part of the Shared Prosperity Vision 2030 (SPV 2030).
In a statement, it said the estimated 4.7% annual GDP growth needed between 2021 and 2030 is based on nominal prices, taking into account inflationary effects.
GDP figures are either measured in nominal prices or constant prices, with nominal prices taking into account the effects of inflation.
Typically, the ministry said GDP values were stated in nominal prices while GDP growth rates were stated in constant prices.
“So to achieve a RM3.4 trillion GDP target by 2030, the GDP must grow at constant prices at 4.7% a year from 2018 to 2030, with an average inflation rate of 2.3%,” said the statement.
“In other words, the goal of a RM3.4 trillion GDP can be achieved with an average growth at nominal prices of 7% a year between 2018 and 2030.”
It said the SPV 2030 document clearly made a distinction between the figures according to the nominal and constant measurements.
This, it added, was consistent with Economic Affairs Minister Azmin Ali’s remarks following the launch of SPV 2030.
Yesterday, former prime minister Najib said the 4.7% figure was inaccurate.
Najib said to hit the RM3.4 trillion mark between 2018, when the GDP stood at RM1.45 trillion, and 2030, the country needs to achieve an average growth rate of 7.36%, not 4.7%.
Najib said he was not the only one who had noticed the error, noting that Malaysian Institute of Economic Research chairman Kamal Salih was also reported to have said that the GDP growth rate has to be between 6% and 8% to meet the SPV 2030 target, and not 4% to 5%.