2019 Budget stance: Responsible and Balanced
- A Bold and Balanced Budget. As widely expected, the Minister of Finance presented a RESPONSIBLE, BALANCED and GROWTH SUPPORTIVE BUDGET for 2019. It’s about rebuilding trust in the Government, restoring fiscal health and prospering the people. It contains no major negative surprises, especially the much speculated inheritance tax and capital gains tax on share transactions. Soda tax was introduced to promote a healthy lifestyle.
- Between choices and trade-offs. We understand the Government have to make choices and trade-offs to manage the medium-term fiscal challenges and limitations. It is indeed a tough and challenging political balancing act for the Minister of Finance to craft a responsive budget without impairing growth and worsening the fiscal deficit.
- Budget’s priorities and policy responses. Despite facing a tough balancing act, the Budget will continue to provide targeted fiscal support to businesses and households while sustaining economic growth and stimulate private investment.
- The Budget’s allocations will be prioritized to sectors (tourism, transport, housing) where it they are needed the most. In particular, there are policies and initiatives to promote entrepreneurship, ensuring domestic SMEs and businesses are digitalized & ICT adoption and our workforce are skilled and adaptive to embrace the Industry 4.0 (IR4.0), which are crucial to the future of the economy.
The economy at a glance – PERFORMANCE and PROSPECTS
- Sustaining economic growth. The Malaysian economy is estimated to grow by 4.8% in 2018 and 4.9% in 2019 respectively, supported by domestic demand and moderate external demand (SERC’s estimates: 4.8% in 2018 and 4.7% in 2019 respectively).
- Downside risks to growth come from rising trade conflict, capital flows volatility, oil prices and geopolitical risks.
- Domestic demand anchors overall growth. Consumer spending growth still respectable (6.8% in 2019 vs. 7.2% in 2018) backed by stable employment and improved income. Private investment growth improved to 5.0% in 2019 from 4.5% in 2018. SERC remains cautious amid external uncertainties and wary about domestic policy implications.
- Public sector’s consolidation continues as it rationalises its spending, focusing on cost savings and value for money projects and programs to support the economy.