KUALA LUMPUR – Budget 2023 is expected to have a less expansionary fiscal policy, according to Maybank Investment Banking Group.
Maybank Investment Banking Group’s chief economist, Suhaimi Ilias, said that Budget 2023 would also have a lower budget deficit to GDP (gross domestic product) ratio of 5% in a relatively limited amount of fiscal space.
He explained that the government is expected to begin medium-term fiscal consolidation that is in line with the goal of reducing the Budget 2023’s deficit from the range of between 6% – 6.5% of the GDP since the year 2020, to a lower level of between 3% – 3.5% by the year 2025, in accordance to the 12th Malaysia Plan (12MP).
During the Bursa Malaysia-Maybank Sectorial Series “Why Malaysia” webinar recently, he said that he believes the process should start next year, the midpoint of the 12MP, with it being a rational viewpoint for the government to do fiscal reforms and transition the subsidies from the current blanket subsidies to targeted subsidies.
He stated that engaging in medium-term fiscal consolidation is necessary and should include having more sustainable revenue sources instead of depending on volatile revenue related to commodities as well as one-off tax revenue such as the Cukai Makmur.
Meanwhile, the Maybank Kim Eng’s head of equity research, Anand Pathmakanthan, stated that Malaysia is expected to see growth in rebounding post-Cukai Makmur along with sustained economic recovery for 2023 with a 12.4% earning expansion for the FTSE Bursa Malaysia KLCI (FBM KLCI).
He explained that even though the increasing cost pressures are causing margin pressures across the board, the commodity sectors such as oil and gas (O&G) and palm oil would have sustained growth and eventually stand out as winners in an inflationary environment.
“Therefore, we see an ‘overweight’ stance for the automotive, aviation, healthcare (hospitals), petrochemicals, gaming, renewables, and technology sectors.
“Other sectors including construction, large-cap banks, plantations, media, consumer, and the property sector are ‘neutral’ while the healthcare (gloves) sector is ‘underweight’,” he continued.
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