DOSM/BKS/5.

2020/Series 66

Prepared by:
SABARIAH HJ. SALIM
Deputy Director, BKS

CURRENT ACCOUNT BALANCE (CAB)

What is Current Account? Primary income
Current account balance is the Primary income is the net flow of
sum of net exports of goods and profits, interest and dividends from
investments in other countries and
services, net primary income, net remittance flows from migrant
and net secondary income to workers.
or from the rest of the world.
 A deficit on the current Secondary income
account means that the
Secondary income refers to
value of imports is greater transfers recorded in the balance
than the value of exports. of payments whenever an
 A surplus on the current economy provides or receives
account means that the goods, services, income, or
financial items without a
value of imports is less than corresponding return of an item of
the value of exports. economic value.

How to calculate Current Account?

CAB = Goods Acc.+ Services Acc.+ Primary Income + Secondary Income
A current account deficit
Current account deficit may is finance by attracting
cause depreciation as there is capital in flow A current account deficit

3
greater demand for imports may be a sign the economy
and foreign currency is uncompetitive

Imports greater than 2 4 The benefit of a current

exports, so expenditure
is leaving the economy
to buy imports
1
account deficit is that it
allows higher levels of
domestic consumption than
Current account
otherwise possible because
deficit we are buying from abroad

1
 Effects of a current account deficit

1. Leakage from circular flow – Aggregate Demand

diminished
Value of 2. May cause depreciation in Exchange Rate
imports greater
3. Foreigners will own more domestics assets
than exports
4. Sign of uncompetitive exports
5. Enables higher levels on consumption

Current Account Balance, Q1 2015 – Q1 2020

Current Account Balance (MYR Billion)
“Malaysia’s current account
balance recorded a surplus of
18.0 16.9

16.0
MYR9.5 billion in Q1
14.9
14.3
14.0 12.8
12.2 12.1

2020 as against MYR7.5 billion 12.0

10.0
10.9 10.8
10.2
10.9 10.7
9.5

in the Q4 2019” 8.0

8.2
7.7 7.5
6.3
6.0 5.2 5.1

“For the year 2019, the current 3.1 3.4 3.3

4.0

account surplus marked 2.0

MYR50.9 billion”
0.0

[Source: Balance of Payments, DOSM]

Current Account Balance (% of GDP), 2010 - 2019

Current Account Balance (% of GDP)
12.0
10.1 10.9
10.0
8.0
6.0 5.2
4.4
4.0 3.5 3.4
3.0 2.4 2.8 2.2
2.0
0.0
[Source: Balance of Payments &GDP, DOSM]

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Malaysia recorded a current account surplus of 3.4 per cent of

the country's Gross Domestic Product (GDP) in 2019 as compared
to 2.2 per cent in 2018. 2
Current Account, Q1 2015 – Q1 2020
MYR Billion

Malaysia’s current account

40.0

30.0 surplus fell sharply to MYR9.5

20.0 16.9 billion in the first quarter of 2020
10.7 12.1
[VALUE] from MYR16.9 billion in the same
10.0
period of the previous year. The
7.5

0.0 goods surplus dropped to

-10.0 MYR28.9 billion from MYR33.4
billion a year ago, while the
-20.0
services gap widened to MYR8.0
-30.0 billion from MYR1.7 billion.
Goods Services Primary Income Secondary Income Current Account Balance

Meantime, the deficit of primary income narrowed to MYR6.0 billion from MYR9.2
billion in the prior year, and that of secondary income fell slightly to MYR5.4 billion
from MYR5.6 billion.
[Source: Balance of Payments, DOSM and tradingeconomics.com]

Current Account Balance (% of GDP), 2000 - 2018

Top 5 ASEAN Countries

[Source: Balance of Payments &GDP, DOSM and data.worldbank.org]

DISCLAIMER: The article in this newsletter is the initiative of DOSM officers based on ad-hoc observation and
collection of brief information in the field during the Movement Control Order. It does not meet the country's
official statistics released standards. Therefore, the content of this newsletter cannot be interpreted as
DOSM's official statistics.
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