Sabah’s economic outlook

Published on: Sunday, December 31, 2017

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By Dr Rafiq Idris
Since the formation of Malaysia in 1963, the economy of its members have changed significantly.

This formation has brought many economic effects to the federation members in general and Sabah in particular.

From economic development and international trade perspectives, Sabah has become more diversified and more open to trade. This short article gives an overview of the recent changes of Sabah’s economic indicator and the outlook for the year 2018. This is solely my personal opinion only. I shall explain by answering few questions such as: How had Sabah’s economy perform in the past few years? How do I see Sabah’s economy in the year 2018?

I will answer the question ‘How had Sabah’s economy perform in the past few years?’ by explaining and highlighting some main macroeconomic indicators of Sabah. Sabah’s production or income growth was recorded to be at about 4.7pc in 2016. This is considered as good, when in general, many countries including developed country grew at a slower rate which is less than 4pc, even though some countries grew faster.

For instance, in 2015, Australia grew at 2.8pc, Japan at 1pc, Korea at 2.8pc, Singapore at 2pc, Thailand at 3.2pc.

Despite world economic slowdown, the strengthening of US dollar and decline of world oil price, Malaysia in general, and specifically Sabah able to grow between 4-6pc.

On cost of living, Sabah recorded generally low inflation rate. In 2015, inflation rate was reported to be at 0.8pc.

This is relatively low, compared to some countries. Hence, generally acceptable.

However, it is hoped that relevant stakeholders will continue to put effort to reduce cost of living due to the fact that generally people feel there is a rise in cost of living in recent years on quite a number of products.

In terms of unemployment rate, the percentage of people who are unemployed are reported to be about 5.4pc in 2016. This is generally low and within the same range with many other countries making it hence acceptable.

For instance, the unemployment rate of Australia, Philippines and France in 2016 were reported to be at 5.7pc, 5.9pc and 10pc respectively.

How about poverty rate in Sabah? Poverty rate has reduced significantly under the current administration of government. Poverty rate was 33.1pc in 1984, 19.7pc in 2009. In 2016, the poverty rate had reduced to 2.9pc (refer to figure 1).

How has Sabah’s external sector performed? Despite the slowing down of the world economy, Sabah’s export grew at 1.38pc, while import falls by 18.3pc. This makes Sabah’s Trade balance position to further improve where the trade surplus amount expand by more than 100pc. The drop in import could partially be attributed to the depreciation of ringgit.

How do I see Sabah’s economy in the year 2018? With the past years’ record, despite the slowing down of world economy, Sabah has been able to grow within the range of 4-6pc. Given the recent budget announcement by YAB Prime Minister and YAB Chief Minister and the current economic growth of Malaysia, I have the confidence that Sabah’s economy able to grow within the same range, even though there are a lot of challenges ahead.

However, this is very much depending on various factors such as world economic condition, fluctuations of oil price, fluctuation of other world commodity prices, exchange rate fluctuation, law changes, policy changes, security and stability among others that may affect Sabah economy in general and the demand for Sabah’s export products. If the world economy further slows down it may affect Sabah’s economy adversely.