Govt forecasts slightly better GDP growth in 2019 — Ministry
KUALA LUMPUR: The government is projecting a slightly better gross domestic product (GDP) growth of 4.9 per cent in 2019 from the 2018 outlook of 4.8 per cent, said the Ministry of Finance (MoF).
Its National Budget Office director, Johan Mahmood Merican said the ministry held onto its forecast even though some commentators believed that the situation would further weaken when comparing the 2018 and 2019 forecasts.
The former Talent Corporation Malaysia chief executive officer said Malaysia recorded a GDP growth of 5.9 per cent in 2017, while this year was a bit of a moderation.
“What is important for the Malaysian public to understand, this is a reflection of the global economic outlook where international bodies, including the International Monetary Fund, have been revising downwards their growth outlook.
“This is partly the result of one of the key drivers which is the US-China trade war and Malaysia, being an open trading economy, is affected by this ongoing trade war, potentially may even worsen.
“We believe the strategies, outlined by the MoF, particularly those to ensure that there are still growth being stimulated through better public-private partnerships.
“We believe there are enough measures and strategies by the government to ensure that we are able to sustain or be slightly better for 2018 growth forecast,” he told Bernama.
On deficit, Johan said in 2017 Malaysia recorded a deficit of 3.0 per cent, and as announced by Finance Minister Lim Guan Eng, it increased to 3.7 per cent this year, and the government planned to reduce it to 3.4 per cent in 2019 and three per cent in 2020.
“On one hand, we have this commitment by the government on fiscal consolidation of the reduction of 3.4 per cent to three per cent, but at the same time this is viewed by the new government as a period of transition,” said Johan.
He said the higher deficit compared to last year’s, which was partly a reflection that the previously announced deficit, was not a reflection of the true situation, given reliance of balance sheet expenditure which resulted in the more than RM1 trillion debt.
Johan said Prime Minister Tun Dr Mahathir Mohamad was committed to seeing the need to redress this situation of excessive debt, hence, this was the government strategy articulated in the 2019 Budget to really see what it could do to reduce the debt level.
“The projected 2018 operating expenditure is about RM235.5 billion, whereas in 2019 we’re projecting RM259.8 billion. Although it may seem expansionary, it is not.
“It looks as though it’s an increase but the government’s focus is for fiscal consolidation,” he said.
Johan said the situation arose because in 2019 the government decided to give a one-off repayment of goods and services tax and income tax refunds as these funds were accumulated from the previous administration that was never repaid to businesses.
“It’s a moral imperative by the government to pay money that isn’t ours, that’s why you have this one-off item in 2019.
“If you take out that element you will see a nett reduction in our operating expenditure of almost RM9 billion. That’s really the crux of the consolidation effort, that’s actually, once the refund item is taken off, it’s a reduction in expenditure,” he said.