KUALA LUMPUR, Feb 18 — The better-than-expected gross domestic product (GDP) growth in 2015 proves that the government’s financial and fiscal reforms have been successful, said an economist.
Affin Hwang Investment Bank Bhd’s Head of Retail Research, Datuk Dr Mohd Nazri Khan, said the economy, which was badly hit in the last quarter due to the plunging oil prices and weakening of ringgit, managed to beat consensus expectations.
“The financial and fiscal reforms that have been undertaken over the last year have been successful to ensure the economy is resilient to weather all of these external shocks.
“We must laud all the unpopular measures introduced by the government such as the Goods and Services Tax and subsidy rationalisation as they have been successful to cushion the weaknesses that we’ve seen from the global uncertainties,” he told Bernama when contacted today.
He said 2015 has been a tough year for Malaysia and it was not easy for the government to strike a delicate balance between public finance reforms to ensure that the country has a budget deficit target as well as continuous growth in the economy.
The government aims to achieve a budget deficit of 3.1% of GDP in 2016 from 3.2% in 2015.
“Overall, I see it’s a good momentum, especially on the domestic front despite challenging economic uncertainties,” Nazri said.
Earlier, Bank Negara Malaysia had announced that Malaysia’s economy grew by 4.5% in the final quarter (Q4) of 2015, bringing the full-year GDP growth to 5% as against 6% in 2014.
This was supported mainly by private sector demand, while on the supply side, it was underpinned by the major economic sectors.
The country had recorded a GDP growth of 5.6% in the first quarter before slowing down to 4.9% in the second quarter and 4.7% in the third.
Malaysian Rating Corp Bhd’s Chief Economist, Nor Zahidi Alias, noted that the Q4 GDP came as a surprise as it surpassed his expectation of 4%.
“The services sector has clearly showed its resilience despite the overall slowdown in the economy. It will likely become a crucial pillar in sustaining the headline growth in 2016.
“Overall, the statistics look positive although going forward, more headwinds are expected to exert pressure on the headline GDP growth,” he said.
Zahidi said the momentum in private consumption was expected to moderate in the first half of 2016 as the lag impact of GST and weaker ringgit rippled through the economy.
“Nonetheless, barring unforeseen circumstances, we still view the government’s revised real GDP growth projection for 2016 achievable,” he said.
In January, Prime Minister Datuk Seri Najib Razak presented the recalibrated 2016 Budget with 11 restructuring measures and adjustments.
The revision is expected to save RM9 billion in operating and development expenditures as announced in October 2015.
Previously, the government announced an allocation of RM267.2 billion in Budget 2016, of which operating expenditure amounted to RM215 billion while development expenditure amounted to RM49 billion.