introduction to macroeconomics group project macroeconomic study of selected economy malaysia

COUNTRY BACKGROUNDIntroduction The world economy is a comprehensive system of international economic relations, including relations of production, distribution, exchange, and consumption

DUY TAN UNIVERSITY ECONOMIC - FINANCE DEPARTMENT

 Nguy nễ Th Thùy Trangị 28204553604

 Nguy nễ Th Thu Hoàiị 28204551902

Date: : 5 Dec., 2023 th

COUNTRY BACKGROUND 1

Introduction 1

ECONOMIC INDICATORS 2

1 Economic output (GDP) 2

2 GDP growth rate 3

3 GDP per capita 3

4 Unemployment rate 4

5 Inflation rate 5

6 Trade balance 8

7 Major exporting goods and services 12

8 Major importing goods and services 13

SUMMARY AND CONCLUSION 14

REFERENCES 17

APPENDIXES 18

Appendix A - Map of geographical location of Malaysia 18

Appendix-B - Team members’ Roles and Responsibilities 19

COUNTRY BACKGROUND

Introduction

The world economy is a comprehensive system of international economic relations, including relations of production, distribution, exchange, and consumption of goods and services between countries Countries around the world all have certain contributions to theworld economy, including Malaysia Malaysia is a multi-ethnic country with a population of over 33 million people The majority of the population is Malay, but there are also significant Chinese, Indian, and indigenous minority groups The official language of Malaysia is Malay, but English is also widely spoken The west of Malaysia is bordered by Thailand to the north, Singapore to the south, and the East Sea to the east The east of Malaysia is bordered by: Indonesia to the east, Brunei to the northeast, and the East Sea to the south The currency unit of Malaysia is the Malaysian ringgit (MYR) As of October 4,

2023, the exchange rate of MYR to USD is approximately 1 MYR = $0.226 USD Malaysia is a federal constitutional monarchy The system of government is closely modeled on the Westminster parliamentary system, a legacy of British colonial rule The head of state is the Yang di-Pertuan Agong, commonly known as the Monarch, who is the head of state and thePrime Minister is the head of government The country follows a multi-party system Malaysia's economic system is a free market economy, with moderate government intervention The Malaysian government plays an important role in economic direction and development, through macroeconomic policies, economic development programs, and business support policies Malaysia's economy has experienced significant growth over the years, especially from the 1980s onwards With a favorable geographical location and an open economic policy, Malaysia has become one of the fastest-growing economies in Southeast Asia With a diverse and independent economy, Malaysia has succeeded in building a solid infrastructure, attracting foreign investment, and developing important industries Key sectors include the processing industry, financial services, tourism, and agriculture Malaysia is a country with a dynamically developing economy, with an average annual GDP growth rate of about 6% in the period 2010-2022 In 2022, Malaysia's GDP will reach 397.5 billion USD, ranking 33rd in the world and 11th in Asia

- But the situation has completely changed since the Covid-19 pandemic began Malaysia'sGDP has decreased sharply, on the contrary, although it was also affected, Vietnam stillmaintained the index at a stable level, increasing steadily from 2019 to 2020.

- It is the State's timely support policies as well as the rapid change in the way businesseswork (from offline to online) that have kept the country's economy at a stable level

- From 2020 to 2022, Malaysia has had a strong return to development but is still rankedbehind Vietnam with a GDP of 406 billion USD, a loss of 2 billion USD when compared to ourcountry, thanks to foreign investment capital strength and productivity growth

2 GDP growth rate

2

- Severely due to the COVID-19 pandemic, the growth rates of both countries havedecreased sharply But the worst situation is still Malaysia with negative GDP growth, whileVietnam still has growth but not much.

- From 2021 to 2022, the economy will recover, especially Malaysia with a growth rate in

2022 of more than 8.7% higher than Vietnam Although growth is not as expected, Vietnamstill ranks 5th in terms of GDP in Southeast Asia, and Malaysia continues to hold the 6thposition in the group of major economies in the region

3 GDP per capita

- Although Vietnam's GDP is exceeding Malaysia's GDP, in terms of GDP per capita,Malaysia is 3 times higher than Vietnam, meaning Malaysians are 3 times richer thanVietnamese people According to data from visualcapitalist, in 2021, Malaysia's GDP percapita reached 11,378 USD, while Vietnam only reached 3,756 USD, only equal to theincome of Malaysians in 1994

- This happens because Malaysia's population is much lower than Vietnam's

4 Unemployment rate

- The COVID-19 pandemic that took place from 2019 to 2021 has greatly impacted thejobs of people in the two countries, production stagnated, businesses changed their workingform from offline to online, many businesses went bankrupt and withdrew from the market,etc But ignoring that factor, the current unemployment rates of Vietnam and Malaysia arestill very high, specifically Vietnam reached 1.90% and Malaysia reached 3.70%

- Regarding Malaysia, the cause of the high unemployment rate in this country lies in thelabor force and the nature of work The main workforce in factories and businesses areforeigners or migrants, accounting for the majority compared to local workers In addition,many fields in Malaysia have to rely on foreign workers to perform "3D work" (workconsidered difficult and dangerous) Although the monthly salary for jobs like this is oftenquite high, many people still do not want to do the job because the work environment is notsuitable

- For Vietnam, the quality of human resources and wages at work Although theGovernment has issued policies to help enhance the quality of education and training, thequality of human resources is still low, making it impossible for many businesses to findsuitable personnel In addition, the current income of some jobs has decreased compared to

4

previous years Although the decrease is not much, this has also had some impact on thedecision of employees to continue working at the enterprise.

- For Malaysia: As the country with the lowest inflation rate among ASEAN membercountries, although prices of domestic goods have increased, thanks to the Malaysiangovernment's commitment to control commodity prices and staples are inflated byproviding subsidies that keep the country's inflation rate low

6

+ The reason for Malaysia's negative inflation rate in 2020 is due to the impact of Covid-19 The pandemic has caused an economic recession, many people are unemployed, leading to

a reduction in consumer demand and production This causes the prices of many products

to decrease and causes some difficulties for businesses But negative inflation also benefits consumers, helping them save money

=> Although Malaysia's GDP-related indicators are somewhat more unfavorable thanVietnam's, the country still maintains its inflation rate lower than 2.1%

Imports of goods and services (% of GDP) – Malaysia

8

-Export

is no growth.

+) Unlike the 2018-2020 period, the 2020-2022 period due to economic restructuring hascaused products to increase in value; participating in free trade agreements such as CPTPPand RCEP has helped the market The export markets of Vietnam and Malaysia areexpanding Therefore, the export situation of Vietnam and Malaysia has increased in recentyears

10

Exports of goods and services (% of GDP) - Việt Nam

=> The total export value is greater than the total import value => The trade balance ofVietnam and Malaysia in recent years has tended to be in surplus

7 Major exporting goods and services

- Goods

+ Palm oil and palm oil products: Malaysia is the second largest producer and exporter ofpalm oil in the world Palm oil is used in many different products, including foods, cosmetics,shampoos, and detergents

+ Electrical machinery and equipment: Malaysia is a manufacturing hub for electricalmachinery and equipment These products are exported to many markets, including China,Japan, and the United States

+ Electronic products: Malaysia is a manufacturer and exporter of electronic products,including mobile phones, computers, and home appliances

+ Textiles and apparel products: Malaysia is a manufacturer and exporter of textiles andapparel products These products are exported to many markets, including the UnitedStates, China, and Japan

+ Wooden furniture and wood products: Malaysia is a manufacturer and exporter ofwooden furniture and wood products These products are exported to many markets,including the United States, China, and Japan

- Service

+ Tourism: Malaysia is a popular tourist destination, attracting millions of visitors each year.Tourists come to Malaysia to visit historical and cultural attractions, as well as to relax onthe beaches

+ Trade: Malaysia is an important trade hub, with many multinational companiesheadquartered here These companies provide financial, transportation and logisticsservices

+ Education: Malaysia is an international education hub, attracting students from all overthe world Malaysia's universities and colleges offer high-quality educational programs ataffordable costs

+ In recent years, Malaysia has been making efforts to diversify its export structure, reducingits dependence on palm oil and palm oil products The Malaysian government hasintroduced many policies to support businesses, encouraging investment in new industries,such as high technology, manufacturing and high-tech agriculture

12

8 Major importing goods and services

- Goods

+ Machinery and equipment: Malaysia needs to import machinery and equipment to serve theproduction process These machines and equipment are imported from many countries,including China, Japan and the United States

+ Raw materials: Malaysia needs to import raw materials to produce its export products.These raw materials are imported from many countries, including Indonesia, China andAustralia

+ Consumer products: Malaysia also needs to import a number of consumer products,including food, beverages, clothing and electronics These products are imported from manycountries, including China, Thailand and Indonesia

- Service

+ Transport services: Malaysia needs to import transport services to transport goods andtourists to and from Malaysia These transportation services are imported from manycountries, including China, Japan and the United States

Financial services: Malaysia needs to import financial services to support its businessoperations These financial services are imported from many countries, including Singapore,Hong Kong and Japan

+ Information technology services: Malaysia needs to import information technology services

to develop its information technology infrastructure These information technology servicesare imported from many countries, including the United States, Singapore and China

SUMMARY AND CONCLUSION

- Malaysia's economy is a new industrial market economy approaching developmentcapacity

- Malaysia is considered a place to develop business lighting

- Malaysia's economic structure is divided into three main sectors: agriculture, industry andservices Of these, services are the sector with the largest proportion, accounting for 49% ofGDP in 2019, followed by industry (41%) and agriculture (10%)

- Malaysia's key industries include electronics, automobile manufacturing, chemicalmanufacturing, machinery and equipment manufacturing, and food and beveragemanufacturing Key specialized services include tourism, finance, banking, insurance,telecommunications and transportation

- Outstanding achievements of the Malaysian economy in recent years include:

+ Economic growth is stable, with an average GDP growth rate of 5.3% in the period from

The economic well-being of citizens in this economy:

In the past five years, the economic welfare of the Malaysian people has significantlyimproved Malaysia's per capita GDP increased from $11.380 in 2018 to $13.108 in 2022.This means that the living standards of the Malaysian people are significantly improving

Year Per capita GDP

14

- Technological innovation: Technological innovation has helped improve labor productivityand create many new occupations This has helped improve wages and working conditions

+ Low-income support program: The Malaysian government has many support programsfor low-income people, including a cash support program for the elderly, people withdisabilities, widows, and children Housing support program for the poor Educationalsupport program for children in difficult circumstances

+ Medical Assistance Program: The Malaysian government provides health insurance to allcitizens, including immigrants Health insurance premiums are divided according to people'sincome

Thanks to these factors, the economic well-being of Malaysians in the past five years hasimproved significantly Malaysians have a higher standard of living, with access to betterquality education, healthcare, and housing services

However, there are still a number of issues that need to be resolved to continue improvingthe economic well-being of the people, including:

- Unemployment rate: The unemployment rate in Malaysia is currently 3.2%, however is stillquite high compared to developed countries

- The gap between rich and poor is still large, with about 20% of the population having anincome of less than 100 USD/month

The Malaysian government should continue to implement policies that address these issues

to continue improving the economic well-being of its people, including:

- Increasing investment in education and training to enhance the skills of workers, helpingthem have more job opportunities and increase their income

- Implement employment support policies for unemployed workers

- Implement poverty reduction policies and narrow the gap between rich and poor

- Implement policies to support the elderly, including health care, housing, and other socialservices

With the government's efforts and the participation of the entire society, the economicwell-being of Malaysians will continue to improve in the coming years Here are somespecific examples of improvements in the economic well-being of Malaysians over the pastfive years: Ex:

- The proportion of households with enough to eat increased from 92.3% in 2018 to 93, 5%

5. report?

https://www.imf.org/en/Publications/WEO/weo-database/2023/October/weo-c=582,&s=NGDP_RPCH,NGDPD,PPPGDP,NGDPDPC,PPPPC,&sy=2023&ey=2028&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1

6. https://www.statista.com/statistics/444749/inflation-rate-in-vietnam/

7. dong-la-228-post775104.html#:~:text=T%E1%BB%B7%20l%E1%BB%87%20th

https://tuoitre.vn/malaysia-chi-tien-ti-mien-phi-an-sang-cho-hoc-sinh-tieu-hoc-12.https://solieukinhte.com/gdp-binh-quan-dau-nguoi-cua-malaysia/