KUALA LUMPUR: The economy is expected to grow at a slightly faster pace of 4.8% in 2020 from 4.7% in 2019 despite the external headwinds, Finance Minister Lim Guan Eng said in the foreword of the Economic Outlook 2020.
He said underpinning the growth are the sound fundamentals which include strong and trustworthy public institutions, a healthy labour market, low and stable inflation, comfortable current account surplus and a well-diversified economy.
“Malaysia’s sound banking system and well-developed capital markets are more than capable of providing sufficient liquidity for various economic activities, ” he said.
As for the China-US trade war which is affecting the global supply chain, Lim said Malaysia is benefitting immensely from changes through investment and trade diversion.
Underpinning the growth will be a jump in construction aided by slight increases from services and manufacturing.
Construction is targeted to grow 3.7% from 1.7% in 2019 from the implementation of mega projects and affordable housing. Manufacturing and services are expected to register a 0.1% increase to 4.15% and 6.2%.
However, agriculture growth is expected to slow down to 3.4% from 4.3% and mining and quarrying to 0.3% from 0.6%.
The government targets a fiscal deficit target of 3.2% of GDP for 2020 versus 3% originally announced in the 2019 Budget. Primary deficit is estimated at 1.0% of GDP in 2020 indicating improved fiscal health, improving from 1.2% in 2019 and 1.6% in 2018.
Lim also cited Malaysia as a competitive regional safe haven with excellent infrastructure, solid rule of law and skilled multilingual workforce.
Approved foreign direct investment in 1H of 2019 rose by 97.2% to RM49.5bil from RM25.1bil a year ago with most of the investments coming from China, Japan, Singapore and the US.
The government is making the country more competitive via new technology, private investments in high-value, hi-tech and knowledge-based areas. Industry will play a big role in ensuring sustainable economic growth as stated in Industry4WRD.
Meanwhile, Prime Minister Tun Dr Mahathir Mohamad said the government has undertaken institutional reforms since coming to power in May 2018. These reforms were to fight graft, protect civil liberties, enhance governance and restore the health of public finance.
“These reforms are being carried out to regain the people’s trust in public institutions, raise their quality of life and restore Malaysia’s reputation in the eyes of the world, ” he said.
He said the institutional reforms would enable society to achieve a more sustainable and equitable long-term and economic growth.
“The dividend from our economic growth must be felt by all segments of our society, if Malaysia is to become a stable developed economy, ” he said.
He said despite widespread global economic slowdown, Malaysia’s economy accelerated to 4.9% in Q2 of 2019 from 4.5% in Q1 and making Malaysia among the few countries in the world which recorded stronger expansion this year.
However, he said more needs to be done, hence the Shared Prosperity Vision 2030 to raise the living standards of all Malaysians to a decent level by 2030.
“These are three objectives to be fulfilled under the Shared Prosperity Vision agenda. One, to address income and wealth inequality in our society so that no one is left behind. Two, to create a more progressive and more participatory higher value economy. Three, to establish Malaysia as one of the leading economic pillars in Asia, ” he said.