Economist sceptical of govt's 2019 GDP growth target

An economist has expressed scepticism on whether the government will be able to reach its GDP growth target for next year.

Kenanga Investment Bank Bhd head of economic research Wan Suhaimie Wan Mohd Saidie is predicting a GDP growth rate of 4.7 percent next year, compared to the government’s forecast of 4.9 percent.

“I’m a bit sceptical (that GDP growth next year) will be a bit higher than this year.

“(The government’s forecast of) 4.8 percent is about right for this year […] but for next year I’m looking at 4.7 percent, which is a bit different from what the government is looking at.

“I think we must factor in slower global growth. The domestic market can only do so much,” he said.

He was speaking as a panellist at a forum in Kuala Lumpur on the government’s 2019 budget proposal organised by the Malaysian Economic Association.

Other members of the panel are S&P Global (Ratings) Singapore director of sovereign ratings Andrew Wood, and Universiti Kebangsaan Malaysia vice-chancellor Noor Azlan Ghazali.

Also present to field questions from the audience were Finance Ministry National Budget Office director Johan Mahmood Merican, deputy undersecretary for fiscal policy Mohd Hassan Ahmad, as well as deputy undersecretary for tax incentives and sectoral policy Sharifah Adlina Syed Abdullah.

In his budget speech last week, Finance Minister Lim Guan Eng said last year’s GDP growth forecast for this year has been revised from between 5.0 to 5.5 percent to 4.8 percent.

As for 2019, Lim said the GDP is expected to grow by 4.9 percent despite global economic uncertainties, but not everyone is convinced.

Previously, the Fitch Solutions Macro Research had also said the government’s forecast of 4.9 percent is too optimistic.

The think tank predicted that Malaysia’s GDP growth over the next five years would average 4.4 percent per year, rather than the government’s predicted average of about 5.0 percent.

On another matter, Wan Suhaimie said it is good that the government is tackling “legacy issues” head-on in an effort to clean up the country’s balance sheet.

“I believe what the government is doing for next year like paying off the GST refund and income tax refund is a good thing.

“I initially thought it would be spread out over the next five years, but I think what the government is doing now is that we have to bite the bullet, endure the pain, and then enjoy faster recovery over the next few years,” he said. - Mkini