ADB: Malaysia still vulnerable to the middle-income trap

KUALA LUMPUR, May 4 The Asian Development Bank (ADB) said that Malaysia has the potential to be one of the seven drivers of the Asian economy by 2050 but warned that it is still vulnerable to seeing its economy stall at the middle-income level.

In a report titled Asia 2050, ADB said that Asias rise will be led by China, India, Indonesia, Japan, South Korea, Malaysia, and Thailand.

The seven countries are expected to have a combined GDP of US$14.2 trillion (RM42.3 trillion) in 2010, 87 per cent of Asian GDP, and a total population of 3.1 billion, or 78 per cent of Asias total population.

The report also forecasts the average per capita income across the seven countries will be US$45,800 in purchasing power parity terms, or 25 per cent higher than the global average of US$36,600.

The ADB divided Asian economies into three groups High Income Developed Economies, Fast Growing Converging Economies and Slow or Modest Growth Economies.

Malaysia was included as part of the second group Fast Growing Converging Economies which meets the World Banks criteria of sustained long-term success.

It warned, however, that: Most of the countries in this group are middle-income countries and still vulnerable to the middle-income trap, adding, Their success in avoiding the middle-income trap will determine whether they will join the first group of developed economies by 2050.

The other countries in Malaysias group were China, India, Armenia, Azerbaijan, Cambodia, Georgia, Indonesia, Kazakhstan, Thailand and Vietnam.

The report said that measures to sidestep the middle-income trap include reducing inequalities and consolidating the fundamentals of development such as training a world-class labour force and building credible and predictable institutions.

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