Do­mes­tic de­mand to un­der­pin 2017 growth

The Sun (Malaysia) - - SUNBIZ -

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.

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