KUALA LUMPUR, Sept 27 — Malaysia’s fiscal deficit target, projected at 3.0 to 3.5 per cent of gross domestic product by 2025, “seems reasonable assuming there is no other negative external shock,” said RHB Investment Bank Bhd senior economist Nazmi Idrus.
“Of course, this assumes that fiscal environment is status quo. The government’s plan to reintroduce the goods and services tax is nowhere mentioned in the 12MP. Similarly, the capital gains tax and the windfall tax mulled by the government are also missing. The economist described the 12MP “as a fine balance between finding new ways to spur economic growth while at the same time keeping government finances in check.”
Additionally, Nazmi said “the impact of the 12MP on the 2022 economic outlook is neutral” but over the long term, growth prospects could improve given the higher allocation for development expenditure, which could serve as a catalyst for stronger investment growth.