GROSS DOMESTIC PRODUCT (GDP)

What is GDP?

Gross domestic product is the best way to measure a country's economy. GDP is the total value of everything
produced by all the people and companies in the country. It doesn't matter if they are citizens or foreign-owned
companies. If they are located within the country's boundaries, the government counts their production as
GDP.

How to Calculate Gross Domestic Product?

The components of GDP are:

Personal Consumption Expenditures plus Business Investment plus Government Spending plus
(Exports minus Imports). Now that you know what the components are, it's easy to calculate a country's gross
domestic product using this standard formula: C + I + G + (X-M).

Types

There are many different ways to measure a country's GDP. It's important to know all the different types and
how they are used.

Nominal GDP: This is the raw measurement that includes price increases. The Bureau of Economic Analysis
measures nominal GDP quarterly. It revises the quarterly estimate each month as it receives updated data.

Real GDP: To compare economic output from one year to another, you must account for the effects of inflation.
To do this, the BEA calculates real GDP. It does this by using a price deflator. It tells you how much prices
have changed since a base year. The BEA multiplies the deflator by the nominal GDP. The BEA makes the
following three important distinctions.

Income from U.S. companies and people from outside the country are not included. That removes the
impact of exchange rates and trade policies.
The effects of inflation are taken out.
Only the final product is counted. For example, a U.S. footwear manufacturer uses laces and other
materials made in the United States. Only the value of the shoe gets counted. The shoelace does not.
Real GDP is lower than nominal.

Growth Rate: The GDP growth rate is the percentage increase in GDP from quarter to quarter. It tells you
exactly how fast a country's economy is growing. Most countries use real GDP to remove the effect of inflation.

GDP per Capita: This is the best way to compare gross domestic product between countries. Some countries
have enormous economic outputs because they have so many people. To get a more accurate picture, it's
helpful to use GDP per capita. This divides gross domestic product by the number of residents. It’s a good
measure of the country's standard of living.

The best way to compare gross domestic product by year and between countries is with real GDP per capita.
This takes out the effects of inflation, exchange rates, and differences in population.
GROSS DOMESTIC PRODUCT (GDP) OF 3 SECTORS IN
MELAKA

Figure 1

Figure 2
Figure 3
 GDP of Primary Sector

Figure 4

The Agriculture and Agro-based Industry in the state is poised for a growth of between four to five percent. The
state projected the growth in the industry by 2018 with the entry of a range of new agriculture and agro-based
products into the local market. Apart from the hospitality and manufacturing industries, try looking into the
agriculture and agro-based industry as another source of revenue for the state. The state is eyeing for food
exports in the future by focusing on the development of the agricultural sector and encourages young
entrepreneurs to venture into the farming sector.

Agriculture is a key component in achieving the goal of becoming a self-reliant state in terms of generating
revenue. A structural transformation will bring about commercial production that could help boost the state’s
economy. The state is also working to promote a vibrant industry for agricultural by-products such as fertiliser,
as well as provide logistics and infrastructure that will revolutionize the industry.

The states need to transform the agricultural sector to add value to locally produced product. Noted that
engaging the youth was important as the agriculture and agro-based industry needs them to implement
strategic measures apart from expanding entrepreneurial opportunities to those keen to be self-employed.
There is a need for innovation in agriculture to inspire the youths to be interested in the industry.
 GDP of Secondary sector

Figure 5

In 2013, manufacturing sector in Melaka is quite high to be compared to other year. Manufacturing sector in
Malaysia posted a growth of 3.5 per cent backed by Motor Vehicles & Transport Equipment mainly in Selangor,
Pahang and Melaka as well as Electrical & Electronic Products in Pulau Pinang and Negeri Sembilan.
Conversely, a contraction in Refined Petroleum Products as a result of a shortfall of production in Melaka and
Negeri Sembilan has weighed down the Manufacturing sector.

Melaka recorded a growth of 1.8 per cent in this sector resulted from a contraction in Refined Petroleum sub-
sector. This, along with a sharp decline in Construction sector dragged down the overall growth of Melaka to
3.2 per cent

Based on figure 4, the growth rate of manufacturing is quite high this is because recently Melaka had been
upgrading the central bus terminal (Melaka Central), the UNESCO Heritage Zones, the revitalized Melaka
River, the night zoo, in-house guides in the museum and many other places of historical and cultural interests,
as well as good local dining and comfortable accommodation. This is increases the contribution of GDP of
secondary sector in 2016.
 GDP of Tertiary Sectors

Melaka has attracted investments worth RM22.5 billion and the investments brought numerous employment
opportunities for the locals. Melaka has always been the choice for investors. The Melaka Gateway is expected
to receive RM40 billion in 25 years, the Melaka Impression, a cultural presentation programme, could easily
draw 1.2 million tourists. Xinyi Glass invested RM2.8 billion in Melaka along with Edra Energy that invested
RM4.5 billion, this can clearly be seen by the people. All this took place due to the dynamic relations between
the state and the federal governments. Looking at the state’s economy, in 2013 Melaka’s economic growth was
2.4 percent and with the efforts taken the economic growth reached 4.5 percent in 2016. Apart from that the
GDP that increased from RM27.9 billion in 2013 to RM33.2 billion in 2016.

The service sector including the services involving tourism have been the biggest contributor to the state
government (45.6 percent) followed by the manufacturing sector (40.9 percent). The number of tourists arriving
in Melaka rose to 16.79 million in 2017 compared with 16.28 million in 2016 and 15.74 million in 2015. The
increasing figures, goes to prove Melaka has everything needed to draw more tourists.

Recently, the main contribution of GDP in Melaka is in tertiary sector which means the services sector, under
tourism sector. Melaka has improved their products in and about the state, namely the convenience of their
transportation hub in example by upgrading the central bus terminal (Melaka Central), the UNESCO Heritage
Zones, the revitalized Melaka River, the night zoo, in-house guides in the museum and many other places of
historical and cultural interests, as well as good local dining and comfortable accommodation. Most of the
tourist attractions are concentrated in its small city centre, which encompasses Jonker Walk that houses
Melaka's traditional Chinatown and exhibits Peranakan architecture. Additionally, A Famosa Fort and St. Paul
Hill are among the tourist attractions located in the Bandar Hilir, which is the old city area. There are also many
shopping centres located nearby, including the Melaka Straits Mosque which is also located in this area. There
are also numerous islands near Melaka including Pulau Upeh near Klebang Beach and Pulau Besar. According
to Tourism Malaysia (2011), a total of 12.35 million tourists had arrived in Melaka in 2011.

Around 75% of the tourists are Malaysian; most of them came from Melaka that is about 17% while others
came from Selangor (12.38%), Kuala Lumpur (10.48%), Johor Baru (8.57%), Negeri Sembilan (4.22%),
Kelantan (4.22%), Kedah (3.53%), Pulau Pinang (3.4%), Perak (2.86%), Sabah (2.58%), Terengganu (2.04%),
Pahang (1.49%), Sarawak (1.22%), Perlis (0.68%) and others (7.76%)