Malaysia to see economical growth in 2019, 2020

Remigio Civitarese
Ottobre 12, 2019

"That is only reported, but we have not received anything official", Tun Dr Mahathir told reporters.

The gross domestic product (GDP) of Malaysia increased 4.7 percent in the starting 6 months of the current year, earlier, the government predicted the economy to grow between 4.3 percent and 4.8 percent this year.

Record also said proposals to reform the country's investment incentives framework was a step in the right direction.

A total of 297.02 billion ringgit (70.96 billion USA dollars) will be allocated for the 2020 budget, down from 314.55 billion ringgit (75.49 billion US dollars) allocation for this year.

Analysts had expected an expanded budget overall, but the government is grappling with a 1 trillion ringgit debt pile left behind by its predecessors and with declining revenue.

Revenue is forecast at RM244.53 billion in 2020, down 7.1 per cent from this year's projection. Unlike this year, there will be no repeat of a RM30 billion one-off payout to the government by state energy firm Petronas.

However, Lim ruled out reintroducing a goods and services tax that was repealed previous year.

The government's operating budget will drop sharply to RM241.02 billion next year from RM262.26 billion allocated for this year. But development spending will expand to 56 billion ringgit from 53.7 billion ringgit in 2019.

In an accompanying fiscal outlook report, the government said it would also set aside an additional 3 billion ringgit to speed up ongoing major infrastructure projects.

Esther Lai, head of sovereign ratings at RAM Ratings, a Malaysian ratings agency said the 3.2% deficit target was within expectations.

He said Malaysia's economy will remain resilient as a result of budgetary measures, adding that the economy is expected to grow by 4.7 percent this year and improve to 4.8 percent in 2020.

Domestic demand is expected to rise 4 per cent this year and 4.8 per cent next year, supported by a stable labour market and low prices. The services sector, which accounts for about 58 per cent of GDP, is forecast to grow 6.1 per cent in 2019 and 6.2 per cent next year.

Policymakers expect petroleum-related revenue to fall 1.4% to 50.5 billion ringgit in 2020, based on a global crude oil price of $62 per barrel.

Gross exports are estimated to expand by 0.1 per cent in 2019 and 1.0 per cent the following year. However, projected weakness in global and domestic demand is expected to slash that figure to RM29 billion in 2020. "It is a pragmatic target as the government is striking a balance between supporting growth and keeping its promise for fiscal consolidation".

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