PUTRAJAYA, Feb 15 - Malaysia will cross the high income threshold by 2026 if its growth rate stays above 4 per cent for the next three years, Economy Minister Rafizi Ramli told a press conference today.
The country remains trapped in a middle income economy today, Rafizi said, even as he noted Malaysia’s closeness to joining the list of nations with a high per capita income.
Malaysia had missed its first target of becoming one by 2020 as the country continues to be bogged down by heavy reliance on a low-waged and labour-intensive economy, seen as a key reason behind the political volatility that has rocked the country in the last decade.
The Pandan MP said the coalition government’s top priority now is to roll out policies that would raise salaries, including the possibility of introducing a national wage growth policy.
“Last week, we went through the latest data... and one of the things we wanted to identify was whether we would achieve a high-income status. It would hinge on two key things,” Rafizi said.
“The most important one is economic growth. If our economic growth can be sustained between four and five per cent, we are really on track. But it has to be yearly, and if all goes well, we can achieve that status as early as 2026 — within this (parliamentary) term.”
Malaysia’s 2022 gross domestic product grew by 8.7 per cent last year but its quarterly growth registered a steady decline, contracting by around 2 per cent in the final quarter.
Bank Negara Malaysia said it is optimistic that Malaysia’s economy will not slide into recession this year, but Rafizi said today the government is still cautious about this year’s growth prospect.
The quarterly GDP data suggested that “things could slow down” this year, he said. The Ministry of Finance’s GDP growth forecast is between four and five per cent.
“The global economic climate that is expected to moderate and grow at a much slower rate in 2023 will affect how our country performs. The world economy is expected to grow by just 2.9 per cent compared to 3.2 per cent in 2023,” the minister noted.
Wage-focused policies
Prime Minister Datuk Seri Anwar Ibrahim is scheduled to table this year’s federal budget next Friday amid keen anticipation that it would include short-term solutions to living cost pressure.
Rafizi said one of Budget 2023’s focal points is programmes to help raise wages, especially for the hardcore poor and B40 households.
He told reporters here today that his ministry could be looking at drafting a national wage growth policy, but said rolling it out would take time because it would involve multiple agencies and ministries.
The Anwar administration said low pay and underemployment are primary factors causing the cost-of-living crisis.
