The gross domestic product (GDP) of Malaysia is expected to moderate to 4.9% this year and edge up between 5.5% and 6% in 2016, forecasts the Malaysian Institute of Economic Research (MIER).
Executive Director Zakariah Abdul Rashid said GDP growth this year would be bolstered by private sector expenditure, encompassing both consumption and investment.
“Recovering global markets and oil prices will be the driver of Malaysia’s growth to those level,” he said during the Malaysia economic outlook briefing on October 22 in Kuala Lumpur.
Net exports this year are expected to be weaker than last year, contracting 6.8%, dogged by the slowdown in export growth and sustained growth in imports of goods and services.
On MIER’s forecast of the 2016 GDP growth of between 5.5% and 6%, he said it is achievable if exports were to grow sharply while crude oil price bounces up.
“The growth projection remains sustainable, especially with output gap narrowing to about zero, while consumer price inflation is expected to edge slightly to 3.0 per cent from a relatively low inflation estimated for this year at 2.5 per cent,” he added.
On the 2016 budget, Zakariah said the two main concerns were the long-term objective of meeting the high-income nation status by 2020 and achieving the fiscal deficit target of 3.2%.
Malaysia’s 2016 budget
The 2016 Budget is to be unveiled on October 23 by Prime Minister Datuk Seri Najib Tun Razak, and it will likely revolve around strategies to transform the country into a developed and high-income economy five years from now, according to a new report by Bernama.
The budget proposals will include strategic measures to stimulate domestic demand following concerns over a challenging external environment next year, as well as further compensate households, especially low-income earners, from the introduction of the Goods and Services Tax (GST).
“Several measures to ensure economic growth stays on a strong and stable path will be announced in the 2016 Budget,” said Najib, who is also Finance Minister, in a recent Twitter post.
Budget 2016 will be the first budget under the 11th Malaysia Plan (11MP).
And for this, most analysts expect Budget 2016 proposals to contain specific strategies for the medium to long-term, focusing on improving productivity, intellectual capital, skills, innovation and technology, and the country’s underlying fundamentals.
“This will help prepare Malaysia for a possible entry into free trade pacts, with strong measures in promoting international trade (exports of domestic products and services) as well as further enhance the competitiveness of the country’s industries,” said Affin Hwang Capital in a research note.
With productivity seen as key driver for economic growth under the 11MP, analysts also expect Budget 2016 to further incentivize the private sector to invest in productivity improvement.
Photo: Malaysian Parliament
