On track for 4-4.5pc GDP growth

MALAYSIA will continue to face another challenging year in 2017 as global growth and trade prospects remain uncertain, said Finance Minister Datuk Seri Najib Razak.

Low oil prices and volatile financial markets could further destabilise the outlook for oil-exporting and emerging economies like Malaysia.

“Being an open economy, we need to be mindful of these risks that may adversely impact our country,” said Najib in the Economic Report 2016/2017 prepared by the ministry.

Last year, the economy faced headwinds from prolonged low commodity prices and volatility in the financial markets.

The recalibrated 2016 Budget’s proactive measures led the country’s gross domestic product (GDP) to grow by 4.1 per cent during the first half of the year.

Growth was supported by strong domestic economic activity, particularly private investment and consumption.

“We are confident of achieving GDP growth of between four and 4.5 per cent for the year,” said Najib.

The government will continue to take proactive measures and leverage digital technology, innovation and creativity to further strengthen the economic fundamentals and withstand external uncertainties.

Since the National Transformation Policy was implemented in 2009, private investments have been enhanced and have created new opportunities resulting in favourable economic growth.

Domestic demand has become the key driver of growth, supported by strong private sector activity.

On public finances, Najib said the financial system remained resilient with domestic financial markets to evaluate the government’s fiscal risks and contingent liabilities as well as come up with appropriate measures.

The monetary policy remains consistent towards achieving price stability and sustainable growth.

During the same period, the ringgit advanced against most major and continuing to support economic activities. The banking system remains well-capitalised with ample liquidity.

The fiscal deficit is expected to shrink to 3.1 per cent this year.

Malaysia’s efforts and persistence in enhancing the prosperity of the nation had been well-recognised regional currencies amid monetary easing measures in major economies and improvement in global crude oil prices.

On the 2016 Budget, the report said the “Prospering the Rakyat” theme prioritised on strengthening economic resilience, increasing productivity, innovation and green with the Class A investment grade ratings from international rating agencies, said Najib.

In terms of the rakyat’s wellbeing, the World Bank refers to Malaysia as a “success story in shared prosperity”.

The government, he added, continues to implement rakyat-centric technology, empowering human capital, advancing Bumiputera agenda and easing the cost of living of the rakyat.

A total of RM265.2 billion was allocated for the year, of which 81.1 per cent or RM215.2 billion was operating expenditure and the remaining 18.9 per cent or RM50 billion for programmes and projects while concerted efforts are undertaken to mitigate the rising cost of living, providing affordable houses, quality healthcare, education and skills training.

This, he said, will enable the rakyat to enjoy higher standard of living, particularly the B40 households. development expenditure.

With the significant drop in crude oil prices, the expenditure envelope was revised downwards to RM252.1 billion and of this, RM207.1 billion (82.2 per cent) and RM45 billion (17.8 per cent) were allocated for operating expenditure and development expenditure, respectively.