In a previous blawg entry, I showed you what inflation is, i.e. an increase in the money supply, how to calculate it, and a little about what it means. In this post, I’ll show you what happens when you apply these insights to the Gross Domestic Product (GDP) and Gross National Income (GNI) of Malaysia.
The Bank Negara Governorm Tan Sri Dr Zeti Akhtar Aziz recently commented on the expected GDP for this year. From The Star:
The Malaysian economy is expected to grow steadily at 5% to 6% in 2013, thanks to strong domestic demand, robust private investment and a better global outlook.
Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz expects growth to be sustained on the back of higher domestic demand and an improvement on the exports front as the global economy recovers.
She added that last year’s better-than-expected 5.6% full-year growth came despite a weaker global economic environment.
Sounds pretty good right? A GDP increase of 5% to 6% is pretty impressive. But what happens if we take a look at GDP and GNI over the past decade and apply our new insight of how to adjust for inflation?
Time for a reality check!
As in my previous articles, I’ve crunched the numbers and put them into a spreadsheet, and so here is a video where I show this to you, and explain briefly what it means.
And that’s today’s Reality Check.