This chart can be a bit confusing but it essentially shows the contribution of the four GDP components to Malaysia’s overall real GDP growth.

20130829GDPgrowthContribution2Q2013

This is exactly the reason why I said it was all government spending┬ápreviously (okay, all is not exactly accurate. It was a significant contributor, if you like). You can see how the government spending portion suddenly appeared strongly in the second quarter of 2013, while investment and consumption’s contribution shrank. Change in net exports was less bad but in terms of year-on-year contribution, it was less than the change in government spending by a huge margin.

Why did government spending go up?

It was the election as mentioned before (by the way, just to be clear, government spending here is more than federal government spending. Federal government spending was really decent, in contrast of the GDP numbers).

In some ways, the election was a de facto stimulus for the economy. The timing of the election was a fortunate accident. Overall growth would have been far worse without the increase in government expenditure. I calculated that if there were no government expenditure growth at all, the GDP would have expanded by about 2.0% YoY only.

One Response to “[2709] Why Malaysia’s 2Q2013 GDP growth was mostly about government spending?”

  1. on 30 Aug 2013 at 11:31 Bobby

    So the election was a booster jab?

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