Domestic demand to underpin 2017 growth
THE Malaysian economy is expected to grow between 4% and 5% in 2017, underpinned by strong domestic demand.
Domestic demand is projected to expand 4.9% in 2017, underpinned largely by private sector expenditure, which is envisaged to grow 6.2%.
Private sector activity will be supported by pro-growth fiscal and accommodative monetary policies in the environment of stable inflation, which is projected to be in the range of 2% to 3%.
Public sector expenditure, which is expected to increase marginally by 0.6%, will be driven by higher capital investment by public corporations.
In tandem with favourable business sentiment, private investment is forecast to rise 5.8%, accounting for 17.2% of gross domestic product (GDP). Growth is expected to be supported by ongoing projects such as Pan Borneo Highway, Rapid (refinery and petrochemical project in Johor) and the Mass Rapid Transit.
Private consumption is seen to grow 6.3% on account of stable labour market, accommodative interest rates and manageable inflation.
The report said cash transfers and lower Employees Provident Fund contributions are also expected to increase household disposable income, which in turn will promote consumption activities.
“Thus, share of private consumption to GDP is projected to increase to 54.2% in 2017,” it noted.
Public investment accounting for 8.4% of GDP, is envisaged to increase 1.1% in 2017, mainly on account of capital expenditure by public corporations.
Meanwhile, public consumption is only expected to increase marginally by 0.4% following government measures to reprioritise spending and reduce noncritical items.
The government maintained its target of 4%-4.5% GDP growth for 2016, with a fiscal deficit of 3.1% of GDP.