SABAH’S drastic drop in GDP growth in 2018 was the result of market reactions to the outcome of the general election the same year, a local economist said, while pointing out that the state’s economy was not in ruins. 

Last year was a time of uncertainty following the federal and state regime change and this had affected investor confidence not just in Sabah but the whole country, said economics professor Dr Kasim Mohd Mansur of Universiti Malaysia Sabah.

He was commenting on Sabah Umno Youth’s Abdul Azis Julkarnain’s claim that Chief Minister Mohd Shafie Apdal had ruined Sabah’s economy, following the release of the Statistics Department’s 2018 socio-economic report for Sabah, late last month.  

Sabah’s GDP growth fell to 1.5% in 2018 from 8% in 2017.  

Kasim said Sabah, like any other state in the country, would not be spared the effects of global issues affecting Malaysia as a whole.

“Public perception and investors’ confidence (following) regime change will take time to adjust.

“Nonetheless, Sabah which is rich in natural resources, can bounce back and this can make a big difference in terms of revenue for the state in the years to come,” he told The Malaysian Insight. 

According to the Statistics Department, Sabah recorded poor growth, with negative growth in mining and quarrying (-5.6%) and agriculture (-0.3%) , due to declining production of crude oil, natural gas and palm oil.

However, the services sector experienced positive growth (5.6%) while the construction sector saw a rebound (24.1%) . These two sectors had supported the growth momentum, the department said. 

Kasim said Sabah is also exposed to external economic factors such as reduced demand for palm oil, crude oil and natural gas, all of which affects the state GDP. 

“Although the services and construction sectors contribute much to Sabah, the state agricultural sector is very much affected due to various factors such as low demand in the international market that leads to low prices due to the gloomy world economy. 

“Therefore, Sabah needs to switch up the services and construction sector to keep the present momentum.” – August 16, 2019.