There is more to the country’s economic health than its debt

Do not simply be misled or fooled by propaganda that stresses the absolute numbers. Instead, look at the economy as a whole and understand what the numbers mean

Eric See-To

Some Malaysians are concerned about the news that there was an increase in Govt debt from RM501.6 billion in 2012 to RM648.5 billion in 2016.

However, what they failed to consider was that during the same period, our country’s yearly GDP or economy size increased, from RM936.2 billion in 2012 to RM1,229 billion in 2016.

This means the debt-to-GDP ratio have been reduced from 53.6% in 2012 to 52.7% in 2016 – signalling increasing strength in govt finances. This ratio actually improved further to 50.2% in Q1 2017 as our economy grew strongly at 5.6% for the quarter.

This is akin to someone whose annual salary was RM93,000 in 2012 and took out a loan of RM50,000 to buy a car.

The person then got promoted and his annual salary increased to RM123,000 in 2016. Should we then be concerned that he took out a loan of RM64,000 to buy a car?