PETALING JAYA, June 15 — Productivity growth coupled with innovation are the key to national prosperity amid the current global economic environment, says an economist.

Tan Sri Dr Lin See Yan said it was a standard fundamental in the economy that productivity involving all levels of the people which will ensure the country’s long-term economic well-being.

“If you look at what is going on in the world, it is very simple...lack of productivity. The United States has become powerful (country) over the last 100 years because they raise the productivity,” he said.

At home, Lin said that for the past 10 years, wages have been growing at an average of between five per cent and seven per cent a year.

“This year, many of the companies are paying at six to seven per cent growth,” he told reporters at his book ‘The Global Economy in Turbulent Times’ launching ceremony by The Sultan of Perak, Sultan Dr Nazrin Muizzuddin Shah, here today.

Lin said without productivity growth, Malaysia would be stuck in the middle-income trap and partly can lead to “budget deficit, balance of payment deficit and trust deficit.” Malaysia registered a productivity growth of 3.5 per cent in 2014 to a productivity level of RM61,708 per employee from RM60,437 in 2013.

Meanwhile, on the ringgit performance, Lin said: “We should stick to the Bank Negara Malaysia Governor’s (Tan Sri Dr Zeti Akhtar Aziz) outlook that the ringgit trend will only be temporarily.

“If she says it is temporary we take her word for it...I would imagine temporary is within three months (but) not more than six months...the effect is not just driven by the economy but also politics and interest rates,” he said.

Lin said if the interest rates were to rise tomorrow, logically, it would accelerate the depreciation of the ringgit as the US dollar is getting stronger.

“If you ask me, with our economic fundamentals today, we don’t deserve (to have) ringgit at 3.70 or 3.80, but of course the economy is not so simple as that.

“It is difficult to say when it is going to be stable because nobody knows where the ringgit going to go,” he said.

At 5pm the ringgit closed lower at 3.7590 to the US dollar from last Friday’s 3.7580. — Bernama