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Capital Dynamics Sdn Bhd is the first independent investment adviser in Malaysia. It has been described as "one of the country's most iconoclastic and critical research outfits".

In February 2004, Capital Dynamics Sdn Bhd launched icapital education.

Since our inception in 1988, we have remained totally independent and have been providing objective advice on Stockmarkets and Economies through iCapital.

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Home > Brief Guides > Economics Lessons

Part 1 - National Accounts

 

GDP refers to the value of all goods and services produced in a country. For example, Table 1a - Malaysia's GDP in 2002 was RM361 bln. This is the output produced by the people, government and firms in Malaysia, whether they are Malaysian or foreign citizens, or Malaysian or foreign-owned.


Table 1a

GNP refers to the value of all goods and services produced by the residents of a country. Malaysia's GNP is all the value of all the goods and services produced by Malaysian individuals, businesses and government. The relationship between GDP and GNP is illustrated in Figure 1a.


Figure 1a

Figure 1b - Malaysia's GDP is always higher than Malaysia's GNP.


Figure 1b : GNP and GDP

Nominal GDP measures goods and services in current price while real GDP measures goods and services in constant price. Table 1b.


Table 1b : Real and Nominal GDP, an illustration

Figure 1c - Malaysia's nominal GDP is higher than real GDP.


Figure 1c : Malaysia's Real and Nominal GDP

Currently, Malaysia's real GDP is measured in 1987 prices.
Figure 1d - Malaysia's long term real and nominal GDP growth rates.


Figure 1d : Malaysia's Real and Nominal GDP Growth

The most common definition of recession is 2 consecutive quarters of quarter-on-quarter negative GDP growth. In Malaysia, recession is when annual GDP growth turns negative. In the US, recession is determined by the National Bureau of Economic Research, where it is a period of a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

We can look at the GDP data from two angles. The first one is from the activity angle.


Table 1c : Malaysia's Real GDP by Economic Activity in 2002

Figure 1e - Malaysia's Services sector is the biggest sector in the economy.


Figure 1e : % Contribution to the Services Sector in 2002

Figure 1f - Agriculture and Mining Sectors have volatile growth.


Figure 1f : Growth in the Mining and Quarrying sector in Malaysia

Figure 1g - Agriculture and Mining Sectors' share in the economy are declining.


Figure 1g : % share of Agriculture and Mining Sectors in Malaysia's Economy

Figure 1h - Growth in Manufacturing sector - strong before 1997/98 crisis.


Figure 1h : Growth in the Manufacturing Sector in Malaysia

Figure 1i - Manufacturing's share in GDP is rising.


Figure 1i : % Share of Manufacturing Sector in Malaysia's Economy

Figure 1j - Growth in the Construction sector.


Fig 1j : Growth in the Construction Sector in Malaysia

Figure 1k - Construction's share in GDP peaked in 1997.


Fig 1k : % Share of Construction Sector in Malaysia's Economy

Figure 1l - Growth in the Services sector is more stable.


Fig 1l : Growth in the Services Sector in Malaysia

Figure 1m - Services share in GDP is rising.


Fig 1m : % Share of the Services Sector in Malaysia's Economy

Summary

GDP = Agriculture + Mining + Manufacturing + Construction + Services

The second is from the expenditure angle.


Table 1d : Malaysia's Real GDP by expenditure in 2002

Figure 1n - Private consumption.


Figure 1n: Growth in Private Consumption in Malaysia

Figure 1o - Private consumption's share in GDP.


Fig 1o : % Share of Private Consumption in Malaysia's Economy

Figure 1p - Public consumption grew strongly after the 1997/1998 crisis- .


Figure 1p : Growth in Government Consumption in Malaysia

Figure 1q - Public consumption's share in GDP on the rise after 1997/1998 crisis.


Figure 1q : % Share of Government Consumption in Malaysia's Economy

Figure 1r - Growth in investment.


Figure 1r : Growth in Gross Fixed Capital Formation in Malaysia

Figure 1s - Investment share in GDP.


Figure 1s : % Share of Gross Fixed Capital Formation in Malaysia's Economy

Figure 1t - % share of exports and imports, Malaysia's economy is influenced greatly by external sector.


Figure 1t : % Share of Exports and Imports in Malaysia's Economy

Summary

GDP = Private consumption + Public consumption + Investment + Exports - Imports

  

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