This article first appeared in The Edge Financial Daily on October 10, 2017 - October 16, 2017
KUALA LUMPUR: Median monthly household income for Malaysians, which rose 6.6% per annum in terms of nominal value from 2014 to 2016, is in line with the country’s gross domestic product (GDP) growth, according to economists.
The median monthly household income grew to RM5,228 in 2016 from RM4,585 in 2014, the statistics department announced yesterday, according to its household income and basic amenities survey conducted between May 2016 and April 2017.
In terms of real value after being adjusted for inflation, median monthly household income grew 4.4% in that two years.
The survey collected data on the characteristics of Malaysian households, particularly on income and basic amenities. Probability samples that represented all Malaysian households were used in the survey.
“In real terms Malaysia’s economy grew about 4% to 5% within that period, so a growth of 6.6% in median monthly household income is reasonable,” an economist with RHB Research Institute told The Edge Financial Daily, saying the rise was in line with the country’s GDP growth.
MIDF Research chief economist Dr Kamaruddin Md Nor concurred, saying the monthly household income growth was reflective of macroeconomic conditions.
“Judging by the fact that the household groups, the bottom 40% (B40), middle 40% (M40) and top 20% (T20) have all shown good growth, and with the decline in the Gini coefficient and the improvement in the overall incidence of poverty, the 6.6% growth in median household income is reasonable,” he said.
The M40 group recorded the highest growth of 6.9% per annum, from a median monthly income from RM5,465 to RM6,275 followed by the B40, which recorded a growth of 6.6% per annum, from RM2,629 in 2014 to RM3,000 in 2016.
As for the T20 group, their median monthly income grew by 6.2% in the period, from RM11,610 in 2014 to RM13,148 in 2016.
The Gini coefficient or Gini ratio is commonly used as a gauge of a nation’s income inequality, with zero representing perfect equality and one representing perfect inequality. Malaysia’s Gini ratio declined to 0.399 in 2016 from 0.401 in 2014.
“This indicates improvement in Malaysia’s household income distribution. Income distribution for the urban strata declined to 0.389 from 0.391 in 2014, while household income distribution for the rural strata rose to 0.364 from 0.355 in 2014.
“The overall incidence of poverty improved from 0.6% in 2014 to 0.4% in 2016. Similarly, poverty incidence in the urban and rural areas depicted the same trend whereby it decreased to 0.2% and 1% respectively. Incidence of poverty in all states declined, with the most significant improvement [being] Sabah, from 4% in 2014 to 2.9% in 2016,” the statistics department said in a statement yesterday.
Geographically, median monthly household income in urban areas rose 6.4% per annum to RM5,860 in 2016 from RM5,156 in 2014, while the rural areas recorded a 5.3% per annum growth to RM3,471 (2016) from RM3,123 (2014).
By states, Kuala Lumpur recorded the highest median monthly household income of RM9,073 in 2016, followed by Putrajaya (RM8,275), Selangor (RM7,225), Labuan (RM5,928), Johor (RM5,652), Melaka (RM5,588) and Penang (RM5,409).
States like Terengganu, Negeri Sembilan, Perlis, Sarawak, Sabah, Perak, Pahang and Kedah recorded median income below the national level of RM5,228 that year.
Terengganu, which was the eighth highest in terms of median monthly household income among the 13 states and three federal territories in the list last year, enjoyed the fastest median income growth rate of 10.9% during the 2014 to 2016 period. Kelantan was last on the list, with the lowest median monthly household income of RM3,079.
