Govt reviews 11MP, resets more realistic targets

KUALA LUMPUR: The mid-term review of the 11th Malaysia Plan tabled yesterday evening shows that the new Pakatan Harapan government is fixing the economy after facing hurdles in fulfilling its pre-election manifesto, Kenanga Research said.

In short, the government is resetting macroeconomic targets, namely in addressing inequality and curbing rising debt. This was by stimulating economic growth with emphasis on ensuring more equitable benefits for all segments of the society.

“In view of rising challenges in the global economy, the government has pared its economic growth target and abandoned a plan to balance its budget by 2020.

“It also emphasise on addressing income inequality and reducing debt,” Kenanga Research said in a report today.

“The government is targeting an average gross domestic product (GDP) expansion of 4.5-5.5 per cent in 2018 to 2020, compared with the 5.0-6.0 per cent target for the 2016-2020 road map set by the previous administration.

“We believe the new growth target is more realistic given the current global economic challenges. This would be in line with our GDP forecast of 4.8 per cent and 4.7 per cent for 2018 and 2019.”

Kenanga added an economic growth of higher than 5.0 per cent would be challenging given that the global economy is projected to slow down.

Malaysia’s budget deficit, which was aimed to be balanced in two years, is now estimated to widen to 3.0 per cent of GDP. This is mainly due to revenue shortfall from the removal of the Goods and Services Tax along with the slowing GDP growth.

“It would be more realistic to expect the fiscal deficit to exceed 3.0 per cent of GDP from 2018 onwards. Nonetheless, the extension of the budget deficits beyond 2020 reflects the enormity of financial state of affairs that the new administration inherited from Barisan Nasional,” it added.

Source: NST