External Trade To Drag GDP Down To 4.5%
Meanwhile, external factors are likely to continue holding major sway over equity market sentiment, with the risk asset markets and equity markets tilting sideways or even down in the short term
Malaysia's 2023 budget has forecasted GDP growth of 4.5%, lower than 2022's 8.7% due to slower external trade performances amid global uncertainties.
Real export growth is predicted to slow to 3.1%, down from 12.8% in 2022.
However, the domestic demand is expected to anchor growth, including an expansionary fiscal policy, with private consumption expenditure expected to increase steadily by 6.1% due to the continuous economic recovery, improving income growth, and strengthening of tourism activities.
The government is also sticking to its fiscal consolidation path, with the size of fiscal deficit to decline to -5.0% of GDP this year and -3.2% by 2025. With the higher development expenditure, the construction sector is expected to be the most obvious beneficiary of the budget.
A Maria
External Threats
Meanwhile, external factors are likely to continue holding major sway over equity market sentiment, with the risk asset markets and equity markets tilting sideways or even down in the short term, but the risk-on mode is expected to return after the anticipated Fed pause in the medium term.
The proposed budget includes a larger allocation of RM97bn for development expenditure, benefiting the construction sector. Announcements relating to capital markets may help to reinvigorate the local capital market, but external factors are expected to continue holding major sway over equity market sentiment in the short term.
The cash assistance provided to low-income groups and civil servants is expected to boost consumer spending, while the construction sector is expected to benefit the most from the expansionary budget. However, external factors could negatively impact equity market sentiment in the short term.
Kazi Mahmood
