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Maybank Investment expects less expansionary fiscal policy in Budget 2023

15/08/2022 07:33 PM

KUALA LUMPUR, Aug 15 (Bernama) -- Maybank Investment Banking Group expects a less expansionary fiscal policy in the upcoming Budget 2023 with a lower budget deficit to gross domestic product (GDP) ratio of five per cent amid a fairly limited fiscal space.

Chief economist Suhaimi Ilias said the government is expected to kick start medium-term fiscal consolidation in line with the aim to bring down the budget deficit from between six and 6.5 per cent of GDP since 2020 to between three and 3.5 per cent by 2025 as per the 12th Malaysia Plan (12MP).

“I think the process must begin in 2023, which is midpoint of the 12MP, and this is also reasonable from the perspective that narrative by the government on fiscal reform and shifting subsidies from current blanket subsidies to targetted subsidies,” he said during at the Bursa Malaysia-Maybank Sectorial Series “Why Malaysia” webinar today.

He said the need to engage in medium-term fiscal consolidation is also important such as having more sustainable sources of revenue rather than relying on volatile commodity-related revenue as well as one-off tax revenue such as the Cukai Makmur.

Meanwhile, head of equity research Anand Pathmakanthan said he estimated that Malaysia would see growth in rebounding post-Cukai Makmur and sustained economic recovery with 12.4 per cent earning expansion for the FTSE Bursa Malaysia KLCI (FBM KLCI) in 2023.

He said commodity sectors such as oil and gas as well as palm oil would have sustained growth and become winners in an inflationary environment although rising cost pressures resulted in margin pressures across multiple sectors. 

“Therefore we see ‘overweight’ stance for automotive, aviation, gaming, healthcare (hospitals), petrochemicals, renewables and technology sectors, while ‘neutral’ for construction, consumer, large-cap banks, media, plantations and property sectors, while ‘underweight’ call for healthcare (gloves),” he added.




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