PETALING JAYA: Although the gross domestic product (GDP) is often used to assess a country’s output for the foreseeable future, a financial daily says it may not tell the whole story in terms of standards of living.

According to Second Finance Minister Johari Abdul Ghani, Malaysia recorded growth of 5.8% in the second quarter of 2017 and 5.6% in the first quarter.

However, The Edge said according to a joint survey conducted by the Federation of Malaysian Manufacturers (FMM) and the Malaysian Institute of Economic Research (MIER), the production growth indicated by GDP numbers had not been felt by all economic segments in the country.

It quoted FMM past president Saw Choon Boon who said areas such as the retail sector had not done as well as other segments during the same period.

Socio-Economic Research Centre (SERC) executive director Lee Heng Guie meanwhile said the decline in purchasing power could contribute to the increasing scepticism about GDP being a good measure of production and prosperity.

“The man in the street is disillusioned despite the strong GDP growth because his purchasing power is shrinking, thanks to the rising cost of living.

“The economy may be growing, but prices continue to remain high and [many are] still grappling with the rising cost of living and higher cost of doing business – wage earners and businesses are generally not feeling better off,” he was quoted as saying.

The debate over the use of GDP as a benchmark of economic growth surfaced last week after FFM president Lim Wee Chai suggested that Malaysia’s economy be measured in US dollars.

Lim said although the country had reported strong GDP numbers, GDP per capita in US dollars had weakened due to the ringgit’s depreciation.

He added that measuring GDP in US dollars would give a better reflection of the country’s economic growth.

Johari had refuted the suggestion, saying measurement in ringgit terms was more reflective of the economy as economic activity in Malaysia was measured primarily through transactions done in the local currency by households, businesses and the government.

RHB Research chief Asean economist Peck Boon Soon told The Edge that it was relevant to measure GDP in a country’s local currency but said he understood the message FFM was trying to convey.

“FMM is saying that while GDP may see strong growth, the prosperity of the ordinary people may not grow in tandem as their purchasing power would have been affected by the ringgit’s depreciation,” he was reported as saying.