KUALA LUMPUR – Moody’s Analytics has upgraded its economic growth projection for Malaysia to 5.0% next year with the expansionary Budget 2022 supporting its brightening outlook for the country’s gross domestic product (GDP), reported Bernama.
It also estimated the economy to grow 3.5% in 2021.
“The resumption of domestic and international travel, as well as rising commodity prices, will help lift the economy out of its pandemic-induced funk.
“An upward revision might be on the books, should Malaysia’s key manufacturing and service sectors continue to outperform expectations in the coming months,” said economist Denise Cheok in an analysis titled “Malaysia Unveils Largest-Ever Budget”.
In July this year, Moody’s Analytics lowered Malaysia’s GDP forecast next year to 3.4% from an earlier projection of 4.0%. It also trimmed its growth projection for this year to 4.7% from 5.6%.
Malaysia has announced its largest-ever budget at RM332.1 billion for 2022, surpassing 2021’s RM322.5 billion allocation.
“The budget would be Prime Minister Datuk Seri Ismail Sabri Yaakob’s first major policy to pass in Parliament.
“While he holds only a slim majority in parliament, the budget is expected to be approved easily, thanks to a memorandum of understanding with the opposition to commit to bipartisan cooperation, signed in September,” Cheok said.
The record-breaking budget will see the country’s debt-to-GDP ratio linger between 5.0% and 6.0% in 2022, easing slightly from a projected 6.5% this year.
Budget 2022 will focus on supporting the Malaysian economy as it emerges from the pandemic, and is on track to reopen fully by early 2022.
“Income tax is expected to fund most of the government spending. Rising oil prices will also boost revenue for the state-owned oil firm Petronas, which will help cover some of the fiscal deficit in the form of dividends to the government,” she noted.