2016-2024 | Monthly | Bank Negara Malaysia

M2 and GDP Growth: Increases in M2 can stimulate economic growth by providing more liquidity for spending and investment. When M2 grows at a healthy pace relative to GDP, it indicates that there is sufficient money available to support economic activity. However, if M2 growth outpaces GDP growth significantly, it may suggest excessive liquidity in the economy, potentially leading to inflationary pressures or asset bubbles.

M2 over GDP Ratio: The ratio of M2 to GDP provides insights into the liquidity of the economy relative to its size. A higher M2/GDP ratio suggests that there is more money in circulation relative to the size of the economy, which can indicate a higher level of financial intermediation and liquidity. However, an excessively high M2/GDP ratio may signal financial imbalances or risks, such as potential overheating of the economy or unsustainable credit expansion.