NOTWITHSTANDING the better global growth prospects arising from stronger recovery of key advanced economies, there remains downside risks which include a further slowdown in China and a significant reduction in global financial liquidity.
Given these uncertainties, the near-term challenges for Malaysia are to further enhance the resilience of the local economy to achieve sustainable growth while ensuring the sustainability of public finances.
In 2014, macroeconomic management will focus on pursuing a private-led growth and enhancing domestic resilience through improving productivity and competitiveness of the economy.
In this regard, the Government will continue to focus on issues such as promoting quality investment, moving up the value chain, enhancing exports, increasing productivity and innovation, and improving public service delivery, among others.
Private investment is an important catalyst in increasing the nation’s output potential. In this regard, the Government has introduced several initiatives to accelerate private investment activities in the economy.
This has yielded positive results as private investment in nominal value grew by 13.1% to RM85.7bil during the first half of this year compared with RM75.8bil a year earlier year.
Despite this, the share of private investment to gross domestic product (GDP) remained low at 18.3% in the first half of this year compared with the pre-Asian financial crisis level.
Therefore, the Government will continue to strengthen the private sector’s role in the economy, especially in new growth areas, high-value added, high-technology and knowledge-intensive industries.
As a highly open economy with increasing trade in goods and services, Malaysia’s exports remain vulnerable to global uncertainty.
Malaysia’s trade surplus has been narrowing since the second half of 2012 and has affected the current account surplus in the balance of payments.
A more holistic approach, which encompasses strategies such as generating high value-added investments, increasing exports, diversification of export markets and employing more aggressive export promotion, needs to be taken.
Knowledge workers are needed to support Malaysia’s economic strategy to move up the value chain, which will complement and accelerate the transformation process from an input-driven to a productivity-driven growth strategy.
There is room for improvement on quality of teaching and learning to produce students with knowledge, thinking and leadership skills.