KUALA LUMPUR, Oct 9 — Kenanga Investment Bank Bhd expects the government to project a higher gross domestic product (GDP) growth target in 2024, potentially between 5.0 per cent and 5.5 per cent.
It said this is in line with the growth target set through the recently tabled 12th Malaysia Plan (12MP) (2021-2025) Mid-Term Review (MTR).
“However, we view this target to be rather optimistic, given the increasingly uncertain global economy which has a direct impact on domestic growth,” it said in a note today.
As such, the research house forecasts 2024’s GDP growth at 4.9 per cent, barring any unforeseen shocks amidst rising concerns of a global economic slowdown due to the impact of a higher interest rate environment.
Budget 2024, slated to be tabled this Friday by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim, is set to translate the Malaysia Madani economic framework, it said.
“Given the optimistic fiscal deficit target set under the 12MP MTR and Medium-Term Fiscal Framework (MTFF) 2023-2025, the government may announce a fiscal deficit target of 4.6 per cent.
“However, we remain conservative, targeting between 4.5 per cent and 5.0 per cent amid a challenging global economic outlook in 2024,” it said.
It noted that the implementation of new taxes such as capital gains tax and luxury tax, coupled with the government’s efforts to tighten tax loopholes through necessary measures and the potential reintroduction of Goods and Services Tax may boost revenue in 2024.
Meanwhile, oil-related revenue is expected to remain stable in 2024, supported by a favourable outlook for Brent crude oil price with official forecast for the oil benchmark remaining above US$80.0 per barrel, driven by increasing global oil demand, extended supply cuts by Organisation of the Petroleum Exporting Countries and rising geopolitical tensions.
In addition, the research house said the New Central Database Hub (Padu) will be introduced to eliminate blanket subsidies, especially on subsidised RON95 and diesel, as well as to increase social assistance packages.
To facilitate salary increments, increase productivity and address the rising cost of living, the government may increase public servants’ wages, as well as implement the Progressive Wage Modelling slated in the second quarter of 2024.
“At the same time, development expenditure is expected to focus on increasing socioeconomic development to provide conducive conditions for economic growth.
“Transport, education, health care and telecommunications networks infrastructure will be the focus for development to boost national prosperity.
“We expect no new megaprojects to be announced, instead, there will be a revival and acceleration in existing projects,” it added.
— Bernama
