KUALA LUMPUR, Oct 23 – The Malaysian economy is expected to remain on a steady growth next year, expanding between four per cent and five per cent. The Ministry of Finance said against the backdrop of increased uncertainty in the global economy, growth in the Malaysian economy would be driven by domestic demand, with private expenditure as the main anchor while public expenditure will increase slightly.
“Domestic demand is expected to register a growth of 5.5 per cent driven by private sector spending. Private sector activity is anticipated to expand supported by broad-based growth across all sectors, benefitting from the ongoing implementation of activities under the Government Transformation Programme and Economic Transformation Programme (ETP),” the ministry said in the 2015/2016 Economic Report released today.
The report is issued in conjunction with the tabling of the 2016 Budget today by Prime Minister Datuk Seri Najib Tun Razak, who is also the Finance Minister. The ministry said private investment is anticipated to increase by 6.7 per cent with the bulk of investment in the manufacturing and services sectors while private consumption is anticipated to expand by 6.4 per cent, benefitting from stable employment prospects and favourable wage growth.
Public investment, on the other hand, is expected to record a higher growth of 2.3 per from 1.6 per cent expected this year supported by new projects under the ETP and 11th Malaysian Plan (11MP) as well as ongoing projects under the 10th Malaysian Plan (10MP). Public consumption is expected to increase by three per cent as compared to 3.6 per cent anticipated this year on account of continued allocation for emoluments, as well as, supplies and services.
On a sectoral basis, the services sector is projected to grow by 5.4 per cent in 2016 and increase its share to 54 per cent of Gross Domestic Product (GDP) from 53.8 per cent this year with all sub-sectors continuing to expand. The manufacturing sector is expected to grow by 4.3 per cent with export-oriented industries to benefit from higher demand as a result of improving growth in advanced economies, while domestic-oriented industries will be boosted by resilient domestic economic activities.
Growth in the agriculture sector is anticipated to be sustained at 1.3 per cent supported by an improvement in the plantation sub-sector and stronger growth in the food commodity sub-sector. The mining sector, it said is expected to remain resilient with a growth of four per cent in 2016, supported by higher output of natural gas and crude oil (including condensates) while the construction sector is projected to increase by 8.4 per cent, largely driven by infrastructure projects.
Meanwhile, the ministry said in 2016, the impact of the Goods and Services Tax on prices is expected to wane, while the weakening ringgit might lead to higher prices in some imported goods. However, this would be mitigated by weak commodity prices and lower global inflation.
However, it said inflation is expected to remain stable at two to three per cent for 2016. It also added that the nominal Gross National Income per capita is expected to increase by 5.6 per cent to RM38,438 next year from 4.2 per cent anticipated growth to RM36,397 this year.
