‘RM20b Pemerkasa to have minimal impact on fiscal deficit’

KUALA LUMPUR: Malaysia’s latest stimulus package offers upside potential to its economic growth and little impact on its fiscal deficit, said analysts.

The RM20 billion Strategic Programme to Empower the People and Economy (Pemerkasa) initiative would likely benefit consumer sector the most while for others, it would be more of an indirect impact, they added.

United Overseas Bank (Malaysia) Bhd senior economist Julia Goh said Pemerkasa would help address concerns over an uneven recovery from the Covid19 pandemic.

“It also aims to strengthen the country’s competitiveness with a specific focus on attracting investments, boosting trade and driving digitalisation,” said Goh, who maintained UOB Malaysia’s gross domestic product (GDP) growth forecast for Malaysia at 5.0 per cent this year.

MIDF Research said Pemerkasa was a sentiment booster, with the government’s commitment to increase allocation for the national Covid-19 vaccination programme seen lifting consumer and business sentiment.

“The Pemerkasa stimulus package will not significantly impact the fiscal deficit despite the government having to make a direct fiscal injection of RM11 billion.

“We expect the government to tap existing funds, particularly the Covid-19 Fund.”

On top of that, the research firm said a higher crude oil price would be revenue positive.

It expects the Brent price to average US$58 per barrel this year, higher than the 2021 Budget’s US$42 per barrel calculation.

“On that note, we project the fiscal deficit to be at 5.7 per cent of the GDP this year (2020: 6.2 per cent of GDP),” it said.

Public Investment Bank Bhd (PublicInvest) said Pemerkasa was targeted more at rendering assistance to those severely affected by the pandemic.

“The fiscal injection is almost one-fold higher than the Permai package (RM6.6 billion).”

“The full rollout of six fiscal stimulus packages this year will see the nation entering a recovery period in the first half before growth picks up pace in the second half. This underpins our unchanged 6.2 per cent GDP projection for the year,” it added.