Monday, March 13, 2017

No Issue In Achieving Deficit Target Amid Higher Oil Price

Economic Research
13 March 2017
Malaysia

Economic Update




We had a meeting with the Ministry of Finance (MOF) on 10 Mar 2017, from which there were some key takeaways, as listed below. 

These are:
      i.        We believe there is no issue for the MOF to bring down its budget deficit for 2017 to its target of 3% of GDP and maintain its borrowings below 55% of GDP;
     ii.        The windfall from higher oil prices would likely be spent to spur economic growth during the year;
    iii.        It prefers to be conservative in its GST collection for 2017 despite the higher-than-expected collection in 2016;
    iv.        The ministry expects the Malaysian economy to pick up to 4-5% in 2017, on the back of a recovery in external activities and resilient private spending – albeit at a slower pace compared to the previous year.
     v.        The MOF intends to focus its expenditure on spurring private spending and private investment, as they are the main drivers of the economy.

Economist:  Vincent Loo Yeong Hong  | +603 9280 2172
Economist:  Aris Nazman Maslan  | +603 9280 2184

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