GDP = C + G + I + (X - M) where;
C = Personal Consumption Expenditure
G= Government Consumption Expenditure
I = Investment
X = Export
M = Import
The above formula calculate GDP based on Expenditure Approach. Another way of calculating GDP is through Income Approach. And the formula is:
GDP = C + S + T where;
S = Private Saving
T = Total Taxation
If we are to combine both formulas, we got:
C + S + T = C + G + I + (X - M)
Eliminating C as being common and rearranging the formula, we end up with:
(S - I) = (G - T) + (X - M)
The above translate into three sectoral balances:
(S - I) = Private Domestic
(G - T) = Government Budget
(X - M) = External
The sectoral balances equation says that total private savings (S) minus private investment (I) has to equal the public deficit (spending, G minus taxes, T) plus net exports (exports (X) minus imports (M)), where net exports represent the net savings of non-residents.
Another way of saying this is that total private savings (S) is equal to private investment (I) plus the public deficit (spending, G minus taxes, T) plus net exports (exports (X) minus imports (M)), where net exports represent the net savings of non-residents. All these relationships (equations) hold as a matter of accounting and not matters of opinion.
Based on the above and using current JPKE - BDKI 2011 report, I manage to put some numbers into it and found a very interesting conclusion.
No wonder, most Bruneians felt that it is getting harder to live-by in the country. No wonder, most Bruneians are mostly in debts. No wonder, we have Bruneians seeking zakat or alms monies. No wonder, we have Bruneians passing envelopes to His Majesty every time he meets his subjects. No wonder, the country GDP's is so sad year after year. All of this is just because we are broke. That's right an ordinary Bruneian is broke!!!!!
To lift the Bruneians from the doldrums, the government needs to tax less or increase her spending or increase her investments and reduce her export. Only then we can start to save up.
Based on the above and using current JPKE - BDKI 2011 report, I manage to put some numbers into it and found a very interesting conclusion.
2008 (B$ Million) | 2009 (B$ Million) | 2010 (B$ Million) | |
Investment, I | 694.6 | 713.3 | 853.1 |
Government Consumption Expenditure, G | 3,722.5 | 3,919 | 4,055.2 |
Total Taxation, T | 11,378 | 6,392.9 | 9,134.9 |
Export, X | 6,576.6 | 6,229.9 | 5,744.1 |
Import, M | 5,559.8 | 5,515.2 | 5,500.4 |
Private Saving, S | - 5,944.1 | - 1,045.9 | - 3,982.9 |
No wonder, most Bruneians felt that it is getting harder to live-by in the country. No wonder, most Bruneians are mostly in debts. No wonder, we have Bruneians seeking zakat or alms monies. No wonder, we have Bruneians passing envelopes to His Majesty every time he meets his subjects. No wonder, the country GDP's is so sad year after year. All of this is just because we are broke. That's right an ordinary Bruneian is broke!!!!!
To lift the Bruneians from the doldrums, the government needs to tax less or increase her spending or increase her investments and reduce her export. Only then we can start to save up.
