KUALA LUMPUR – Malaysia’s economy is expected to expand between 4.0 and 5.0 per cent in 2017, given the nation’s strong economic fundamentals coupled with the 2017 Budget strategies and programmes.
The Economic Report 2016/17, released by the Ministry of Finance in conjunction with the 2017 Budget announced by Prime Minister Datuk Seri Najib Tun Razak today, said the expansion translated into gross national income (GNI) per capita growth of 5.0 per cent to RM39,699 from RM37,812.
“On the demand side, growth will emanate from domestic demand, particularly private consumption and private investment expenditures, which are expected to expand 6.3 and 5.8 per cent respectively.
“In tandem with higher investment activities, the savings-investment gap is expected to narrow to 0.5-1.5 per cent. Inflation will remain manageable, while the economy continues to operate under full employment,” it said.
The report also said that all economic sectors were expected to contribute to growth, with the services and manufacturing sectors spearheading the expansion.
With the government’s commitment to enhancing revenue and reining in expenditure, the fiscal deficit was expected to improve further to 3.0 per cent of Gross Domestic Product (GDP).
“These developments would strengthen the economic fundamentals and augur well for a nation in transition from an upper-middle to a high-income and advanced nation,” it said.
The report also said measures to strengthen the nation’s economic fundamentals would feature prominently in the budget as an avenue to further boost investor sentiment and attract domestic and foreign direct investment.
At the same time, it said, allocations would be made to accelerate investment, provide infrastructure and review corridor development plans.
“Also, measures will be introduced to invigorate the capital market as well as empower exporters to scale up their operations by looking beyond traditional markets,” it said.
On the supply side, the report explained that the focus of the budget would be in areas with high multiplier effects such as tourism, the digital economy, small and medium enterprises, entrepreneurship and research and development.
At the same time, the report stressed the need to unshackle the economy from various structural issues which may hamper Malaysia’s long-term growth potential.
“From a broader perspective, these issues are also opportunities for the government to strengthen domestic demand as the engine of economic growth and unleash the true potential of the domestic economy,” it said.
During the first half of this year, the report said, private consumption stood as the biggest component of domestic demand, contributing 3.1 percentage points to real GDP, while household debt stood at 88.9 per cent of GDP as at end-June.
“The export sector has made considerable progress in expanding the product and market mix. Although Malaysia’s involvement in the global value chains is relatively high, domestic value-added in high-tech exports is low,” it added.- BERNAMA