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INTRODUCTION

Gross National Product (GNP) is an economic statistic that includes GDP, plus
any income earned by residents from overseas investments, minus income earned within the
domestic economy by overseas residents.
Gross national product (GNP) is the market value of all the products and services produced in
one year by labour and property supplied by the citizens of a country. Unlike gross domestic
product (GDP), which defines production based on the geographical location of production,
GNP allocates production based on location of ownership.

GNP is an economic statistic that is equal to GDP plus any income earned by residents from
overseas investments minus income earned within the domestic economy by overseas
residents.

GNP does not distinguish between qualitative improvements in the state of the technical arts
increasing computer processing speeds, and quantitative increases in goods number of
computers produced and considers both to be forms of "economic growth".[1]

When a country's capital or labour resources are employed outside its borders, or when a
foreign firm is operating in its territory, GDP and GNP can produce different measures of
total output. In 2009 for instance, the United States estimated its GDP at $14.119 trillion, and
its GNP at $14.265 trillion.

Malaysian GNP in 2006 until 2015


2006
The Malaysian economy strengthened in 2006,with real gross domestic product (GDP)
expanding by 5.9%. The robust global growth during the year resulted in strong demand for
electronics and primary commodities. This strong external environment was supported by
strong domestic activity as private consumption rose in line with incomes and private
investment increased to expand productive capacity to meet demand. As a result of the
expansion in domestic and external demand, employment also strengthened as reflected in the
decline in retrenchments and the acceleration in job creation. The unemployment rate
remained unchanged at 3.5% while nominal wages increased.

2007
Malaysia's real gross domestic product (GDP) posted 641.49 billion ringgit (about
200.46billion U.S. dollars) in 2007 at current prices, up 6.3 percent compared with that in
2006. The 6 percent-strong growth was achieved thanks to strong domestic demand, driven
by strong private consumption spending and investment activities, according to a statement
issued by Malaysia's central bank Bank Negara Malaysia (BNM).The economic growth rate
is higher than 5.6 percent in 2006, but lower than 6.8 percent in 2004. The growth prospects
for the Malaysian economy remains favorable in 2008. Expanding domestic demand will
continue to provide strong support for the economy .Near-term indicators as well as the latest
six-month smoothed growth rate of the Department of Statistics of Malaysia leading index
indicate that the nation's economy would remain resilient .
2008
During this year ,the impact of the global economic and financial crisis on Malaysia has been
felt largely through a contraction in aggregate demand caused by a collapse in exports, either
directly or indirectly, to the United States.The GDP growth slowed down to 0.1% in the last

quarter of 2008, and decelerated by -6.2% and -3.9% respectively in the first two quarters of
2009 as a consequence before falling further by -3.9% in the second quarter of the
year. Malaysias economy has clearly entered a recession following a decline in GDP
over the first two quarters of 2009.
2009
In 2009, Malaysia had the highest and lowest GDP growth rate. In early of 2009, Malaysia
has undergone the lowest growth rate of -7.6, but Malaysia regained its bearings and
managed to get the highest GDP growth rate of 5.9 at the end of the same year. Final
consumption expenditure fell gradually over the whole of 2008, but contracted in the first
quarter of 2009 before recovering by 0.6% in the second quarter. While public consumption
slowed down to 2.1%, growth of private consumption fell by -0.7% in the first quarter of
2009.

The Gross National Product in Malaysia from 2005 to 2009 is as follows:

GNP (in 2000


factor)Ringgit
Malaysia in
Million

2005
424,294

2006
454,625

2007
482,239

2008
496,077

2009
504,864

Private
consumption

216,247

230,222

255,028

276,527

286,205

Private
investment

50,841

54,643

59,996

60,896

50,118

Public
consumption

58,395

61,258

65,299

72,880

78,187

Public
investment

48,425

52,473

57,378

57,775

57,378

Exports of goods 554,261


& services

592,89

617,628

626,824

522,913

Imports of goods 475,838


& services

516,412

544,059

556,015

473,102

2010
Malaysias economy outperformed expectations to pull off a remarkable growth of 7.2% for
2010 to MYR 558.38 billion, compared with a contraction of 1.7% in 2009. The government
had earlier forecasted gross domestic product growth at 56%, while other economists were
more optimistic with a 7% growth projection. Malaysias record high GDP came from a sharp
rebound in its manufacturing sector, which displayed a growth rate of 11.4%, compared to a
9.4% decline in 2009, mainly from the petroleum, chemical, rubber, and plastic products
industries. The service sector grew likewise, displaying a 6.8% growth rate, compared to a
2.7% growth rate in the previous period, supported by the wholesale and retail trade, business
services, and real estate subsectors.
2011
Malaysias gross domestic product (GDP) expanded by 5.2% in the fourth quarter of 2011
despite the challenging external environment as domestic demand continued to support
growth. Full-year growth came in at 5.1% after expanding 7.2% in 2010 as domestic demand
conditions remained favourable supported by both private and public sector spending. Private
comsumption increased by 7.1% supported by favourable income growth while public
consumption rose by 23.6% following higher expenditure on emoluments and supplies and
services.

2012
The Malaysian economy performed better than expected in 2012, with a higher growth of
5.6% (2011: 5.1%). The strong growth was supported by resilient domestic demand,which
cushioned the negative impact of the weak external environment. Domestic demand recorded
its highest rate of expansion for the decade, supported by stronger consumption and
investment spending. Unlike in 2009 when the weakness in external demand had significantly
affected domestic economic activity through its impact on private investment and private
consumption, domestic demand had remained resilient in 2012.

2013
The Malaysian economy expanded by 4.7% in 2013, driven by the continued strong growth
in domestic demand. Despite the weaker external environment in the first half of the year,
domestic demand remained resilient throughout the year, led by robust private sector activity.
Private consumption was strong,supported mainly by favourable employment conditions and
wage growth. Private investment registered a strong growth in 2013, continuing the
momentum from the previous year

2014
Malaysias economy recorded a value of GDP at RM1,106.6 billion in 2014 (2013:
RM1,018.8 billion) at current prices (Chart 1). The contribution of Compensation of
Employees to Malaysias economy accounted for 34.3 per cent (RM379.4 billion) while
Gross Operating Surplus holds the largest share in income components at 62.6 per cent
(RM692.9 billion). The remaining of 3.1 per cent (RM34.3 billion) was contributed by Taxes
less Subsidies on Production and Imports.
In 2014, the economy strengthened to 8.6 per cent as against 4.9 per cent in the preceding
year with all sectors posted a better growth. Compensation of Employees rose to 9.7 per cent

(2013: 7.2%) which was largely led by Services and Manufacturing sectors. Gross Operating
Surplus augmented to 6.4 per cent (2013: 3.3%) while Taxes less Subsidies on Production
and Imports soared to 57.9 per cent.

2015
In the fourth quarter of 2015, GDP expanded 4.5% over the same period of the previous year,
which marked the slowest rate since Q1 2013. While this was a deceleration, it the figure was
above market expectations of a 4.3% increase and brought full year GDP growth to 5.0%.
The stronger-than-expected performance occurred in spite of a series of factors that
threatened to significantly compromise the economy, including currency depreciation,
political instability concerns, unfavourable base effects regarding both investment and
consumption, as well as a collapse of revenues related to the oil and gas sector.

Sector that most contribute in Malaysias GNP


2006
In 2006,the services sector with a share of 58.2% to GDP, continues to drive growth,
supported by steady expansion in wholesale ,retail trade ,hotels and restaurant and transport,
storage and communication sub sector .With continuing strong domestic demand and
expanding trade related activities, the sector is estimated to expand by 5.7%(2005:6.5%)with
all sub sector recording positive growth .Manufacturing which accounts for 32% of GDP
remains the largest export earner and the second most important sector generating
employment for the economy .This is expected to record a higher growth of 7.3% in
2006(2005:5.1%).following the anticipated better performance of the export-oriented
industries ,textile and petroleum.
2007
On the sectoral front, growth was broad based in 2007, reflecting expansion in all sectors of
the economy. The services,construction and mining sectors showed strong performance
during the year. The services sector expanded by 9.7%, supported mainly by the real estate
and business services; finance and insurance; communication; and wholesale and retail trade
sub-sectors. The construction sector turned around to record a positive growth of 4.6% driven
mainly by the civil engineering sub-sector. The mining sector also recorded positive growth
of 3.3% due to higher output of oil and natural gas.
2008
The services sector remained as a major contributor to overall GDP in 2008 with a registered
growth of 7.2%. Although the growth was lower compared to 2007 ,sub-sectors like the
wholesale and retail trade finance and insurance, communication, transportation and storage
and other services lent significant support to strengthen the overall growth in the Services
Sector. During the first half of 2008, this sector posted a strong performance as a result of
available demand evident in a stable environment supported by the increase in tourismrelated activities.
2009
The manufacturing export sector has been hit the worst during this global crisis in 2009.The
electrical and electronics industry declined sharply by 41.4% in the first quarter of 2009
compared with a fall of 22.5% in the last quarter of 2008, due to a contraction in export
oriented industries and weaker support from domestic-oriented industries. In addition, value
added in the manufacturing sector declined by 17.6% in the first quarter of 2009 compared
with a drop of 8.8% in the fourth quarter of 2008.However, Palm oil is the countrys main
agricultural product for domestic as well as export markets. Malaysia currently accounts for

41% of world palm oil production and 47% of world exports. There appears to be less worry
regarding the impact of the global crisis on this sector.

2010
For 2010,the most contribute is manufacturing sector, which displayed a growth rate of
11.4%, compared to a 9.4% decline in 2009, mainly from the petroleum, chemical, rubber,
and plastic products industries. The service sector grew likewise, displaying a 6.8% growth
rate, compared to a 2.7% growth rate in the previous period, supported by the wholesale and
retail trade, business services, and real estate subsectors. This was further aided by a
continuous inflow of foreign direct investment and the Central Bank of Malaysias prudent
management of the reserve position.
2011
As percentage share of real GDP by sector, the three largest sectors in 2011 were services
(58.6 per cent), manufacturing (27.5 per cent) and agriculture (7.3 per cent), while the
remaining sectors were mining (6.3 per cent) and construction (3.2 per cent).

2012
The services sector was responsible for the largest share of Malaysias GDP. In 2012, the
sector contributed 54.6 per cent to the countrys GDP and recorded a growth rate of 6.4 per
cent in value added. Employment in the services sector was estimated at 6.7 million persons
or 53.5 per cent of total employment in 2012.Productivity of the services sector is expected to
grow more than four per cent in 2012, led by communications (5.7%), wholesale and retail
trade (4.9%) and the other services (5.6%) sub-sectors.

2013
All sector in 2013 record a positive growth. The growth continued to be driven by services
sector with strong activitiy in domestic oriented services,particularly with wholesale and
retail trade as well as communication subsector.The service sector expanded 5.4% during the
first six month of 2013,mainly driven by resilient domestic consumption and investment
activities.The subsector is expected increased 5.7% supported by strong consumption.
2014
Malaysia's economy expanded at a faster pace of 6.4% in the second quarter April to June
2014, underpinned by strong growth in the services and manufacturing sectors - exceeding
forecasts of 5.8%. For the first half of 2014, Malaysia's GDP strengthened to 6.3% from
4.4%. The services sector recorded sustained growth of 6%, faster than the 5% a year ago,
supported mainly by the trade-related sub-sectors. However, it was slower from the 6.6%
growth in Q1, 2014.The manufacturing sector expanded at a faster pace of 7.3% from the
3.8% a year ago (Q1 2014: 6.8%) underpinned by the electronics and electrical cluster,
particularly semiconductors. Meanwhile, the agriculture sector registered strong growth of
7.1%, reflecting higher production of palm oil.

2015
The International Trade and Industry Ministry is confident the services sector will contribute
70% to the gross domestic product (GDP) by 2015, on par with with other developed
countries such as the United States and Japan.
Deputy Minister Datuk Mukhriz Mahathir said on Tuesday the 10th Malaysia Plan, running
from 2011 through 2015, anticipates that the average real annual growth rate of the sector
should accelerate to 7.2% during 2010-2015, and recognises that higher investments are
needed in the services sector.

Conclusion /Review from 2006 to 2015


During the review period, the manufacturing sector continued to remain as one of the major
contributor to economic growth. The competitiveness of the manufacturing sector will be
further enhanced by focusing on higher value added and high-technology activities as well as
promoting productivity driven growth. The Third Industrial Master Plan (IMP3) has outlined
the strategies for the period 20062020, to promote the development of 12 targeted sectors,
namely petrochemicals, pharmaceuticals, rubber and rubber products, wood-based products,
oil palm-based industry, food processing, electrical and electronics (E&E), medical devices,
textiles and apparel, machinery and equipment, metals industry and transport equipment.
In terms of GDP share, the manufacturing sector contributed 30.7% in 2005 and 29.1% in
2008. During the review period, manufacturing growth was 5.2% in 2005, 6.7% in 2006,
3.1% in 2007 and 1.3% in 2008. The lower performance in 2007 and 2008 was due to
reduced global demand for E&E products. Further decline is expected in 2009 due to the
current global economic crisis.
In the recent news,Malaysias services sector is continuing to expand and the hope is that it
will contribute even more to the economy.Deputy Finance Minister Datuk Ahmad Maslan
said the Government was generally supportive of entrepreneurs who wanted to start
businesses, particularly in the services sector, by providing various loan schemes.He said this
in response to the latest growth figures released by Bank Negara on Friday, which showed the
services sector had contributed a strong, sustained 6% to the countrys second-quarter gross
domestic product (GDP) figure of 6.4%.Ahmad said Malaysias GDP growth for the quarter
had beaten most countries in the Asean region, including Singapore at 2.1%, while surpassing
that of South Korea (3.6%), the United States (2.4%), the United Kingdom (3.1%) and Russia
(1.2%).Only China at 7.5% beat Malaysias GDP growth, he said.Ahmad told reporters this
after launching H Pro Motorsport Sdn Bhd in Kuala Lumpur yesterday.Malaysias 6.4%
second-quarter economic growth also beat forecasts of analysts and was a 0.2% improvement

over the first quarter.The construction sector was the main contributor to the GDP at 9.9%,
followed by manufacturing (7.3%), agriculture (7.1%), private consumption (6.5%) and
petroleum and mining (2.1%).Ahmad said the strong growth was the result of good
management of the economy in the midst of the uncertainty in the global environment, as
well as Malaysias political stability.

Malaysia GDP Growth Rate (2013-2016)

The Gross Domestic Product (GDP) in Malaysia expanded 1.50 percent in the fourth quarter
of 2015 over the previous quarter, accelerating from a 0.7 percent rise in the previous period.
GDP Growth Rate in Malaysia averaged 1.29 percent from 2000 until 2015, reaching an all
time high of 5.90 percent in the third quarter of 2009 and a record low of -7.60 percent in the
first quarter of 2009. GDP Growth Rate in Malaysia is reported by the Department of
Statistics Malaysia.

CONCLUSION
Apart

from

this

using

The gross

domestic

product (GDP)

is

one

of

the

primary indicators used to gauge the health of a country's economy. It represents the total
dollar value of all goods and services produced over a specific time period; you can think of
it as the size of the economy. Usually, GDP is expressed as a comparison to the previous
quarter or year. For example, if the year-to-year GDP is up 3%, this is thought to mean that
the economy has grown by 3% over the last year.
Measuring GDP is complicated (which is why we leave it to the economists), but at its most
basic, the calculation can be done in one of two ways: either by adding up what everyone
earned in a year (income approach), or by adding up what everyone spent (expenditure
method). Logically, both measures should arrive at roughly the same total.
The income approach, which is sometimes referred to as GDP(I), is calculated by adding up
total compensation to employees, gross profits for incorporated and non in cooperated firms,
and taxes less any subsidies. The expenditure method is the more common approach and is
calculated by adding total consumption, investment, government spending and net exports.
As one can imagine, economic production and growth, what GDP represents, has a large
impact on nearly everyone within that economy. For example, when the economy is healthy,
you will typically see low unemployment and wage increases as businesses demand labour to
meet the growing economy. A significant change in GDP, whether up or down, usually has a
significant effect on the stock market. It's not hard to understand why: a bad economy usually
means lower profits for companies, which in turn means lower stock prices. Investors really

worry about negative GDP growth, which is one of the factors economists use to determine
whether an economy is in a recession.

GNP measures total supply of output produced during a given period, it then must also equal
total demand assuming there is no savings in an economy. Total demand for domestic output
is made up of five components: consumption, government spending, investment, net exports
and net factor payments. Because GNP must equal total demand for output, it can then be
expressed mathematically by:
GNP = C + G + I + NX +NFP
The calculation is broken up as follows:

Consumption (C) is the actual consumption spending of the household sector. It


consists of food, clothing and all consumer spending. Consumption is by far the
largest component of GNP and accounts for approximately two-thirds of total
demand.

Goods and services (G) is the next largest component of government purchases. These
items include salaries for government employees, national defense, and state and local
government spending. Government transfer payments, such as unemployment
compensation, are not included.

Investment spending (I) is not what we commonly think of when we discuss


investing. It does not include the purchases of stocks and bonds. Rather, investment
spending includes business spending that will improve the ability to produce in the
future. Inventory spending, capital improvements, and building machinery are
included in this category. Investment in housing construction is also included.

The net exports (NX) component is equal to exports (goods and services purchased by
foreigners) minus imports (goods and services purchased by domestic residents). For
some time the U.S. has been buying more foreign goods and services than it sells
abroad, which creates a trade deficit, thereby reducing its GNP.

Finally, net factor payments (NFP) are the net amount of payments that an economy
pays to foreigners for inputs used in producing goods and services, less money the
economy receives for selling the same factors of production.

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