THE average Malaysian rightly wants a better quality of life. This wish is getting closer as Malaysia moves forward to becoming a high-income nation. The necessary structural changes to make this possible are being put in place, budget by budget. Expect some on Oct 18 when the 2025 Budget 2025 is announced.
The World Bank says Malaysia is on track to becoming a high-income nation by 2028. Or thereabout, say others, differing only in a year or two. There may be some dark clouds out there that may throw a spanner in the works, as a regional war in the Middle East would. What has been happening there doesn't give us much comfort, but let's hope sane heads will prevail to make the world a liveable place for all.
This notwithstanding, the global economy has had some sunshine since six months ago. This is largely due to contributions by emerging and developing economies, where growth was more than double those of advanced economies, according to International Monetary Fund data. China's most recent stimulus package — media reports say this to be valued at more than US$325 billion — to haul its economy out of the slump it has been in may help give the rest of the world a better diet for growth.
When the world's biggest economy falters, the second in line must step in. Like interest rate cuts of the Federal Reserve, China's huge stimulus should also help give Malaysia's growth prospects appetite a boost. As the World Bank data show, all the dials are add up. Before a slice of a better quality of life is distributed to the average Malaysian, the pie must be grown. And the good news is, it is growing.
Based on the World Bank's forecast for this year, Malaysia is heading for a growth of 4.9 per cent. Others, like the Socio Economic Research Centre, are more optimistic, with a forecast of a 5.4 per cent GDP growth for this year and 5.0 per cent for 2025. It is the growth rate of such a range, together with a strong ringgit, that will make us a high-income nation. In the analysis of the World Bank, Malaysia may even be a high-income nation in 2027 if the US dollar-ringgit exchange rate remains at the 4.2 level. This will be a major transformation, especially so when we have been held back in the middle-income trap for long.
Sure, there will be headwinds, but most likely caused by external factors, such as hot wars and soft wars. Either will have an adverse impact on our economy. At best, energy prices will skyrocket. At worst, there will be a shutdown of production. Either is bad news. But external levers aren't ones we can pull to our advantage.
Domestic levers are the ones we must control to give the average Malaysian the better quality of life he or she is after. One such is the lever which ensures that structural changes take place, especially to enable equitable distribution of the nation's wealth. For sure, there will be short-term pain. But in the long term it should average out as a better quality life for all. Although the long term shouldn't be too long.