Page 125 - Malaysia 2016
P. 125
2016 125
effects, however, will be partially offset The services account is projected to
by continued growth in income and record a narrower deficit on account
employment, as well as some support of an expected improvement in tourism
from Government measures targeted activity. Overall, the current account
at enhancing households’ disposable surplus is projected to narrow further
income. to 1.0 - 2.0% of gross national income
(GNI). On the supply side, all economic
In an environment of prolonged sectors are projected to expand, albeit
uncertainties and cautious business at a more moderate pace in 2016. The
sentiments, private sector investment services and manufacturing sectors
growth is projected to be slower will remain the key drivers of overall
compared to its performance in the past growth. Despite the lower oil and gas
five years. Capital expenditure in the prices, growth in the mining sector will
upstream mining sector will continue to be supported by new gas production
be affected by the environment of low capacity. Growth momentum in the
energy and commodity prices. Support construction sector is projected to
to private sector capital spending will moderate slightly in 2016 amid a modest
mainly stem from the implementation of expansion in both the residential and
on-going and new investment projects, non-residential sub-sectors.
particularly in the manufacturing and
services sectors. Headline inflation is projected to be
higher at 2.5 - 3.5% in 2016 (2015: 2.1%),
Reflecting the Government’s due mainly to increases in the prices
commitment to more prudent of several price-administered items
spending, growth of public sector and the weak ringgit exchange rate.
expenditure is also expected to be However, the impact of these cost
more moderate but would continue to factors on inflation will be mitigated by
be supportive of overall growth. Public the low global energy and commodity
investment is, however, projected prices, generally subdued global
to turn around to register a positive inflation and more moderate domestic
growth, reflecting higher spending by demand. The trajectory of inflation
the Federal Government on fixed assets during the year, however, could be
and the continued implementation of more volatile given the uncertainties
key infrastructure projects by public relating to global oil and commodity
corporations. prices as well as the pace of global
growth.
The external sector is expected
to remain resilient in 2016. Despite Economic and Monetary Management
subdued commodity prices, Malaysia’s in 2016
export performance is projected to
remain positive, in line with the modest Monetary policy in 2016 will focus on
improvement in external demand. The ensuring that monetary conditions
well-diversified nature of Malaysia’s remain supportive of sustainable
exports will continue to support the domestic growth with price stability,
overall growth in exports. Gross imports taking into consideration the evolving
are projected to expand further amid risks in the external and domestic
an increase in intermediate imports to environments. In particular, global
support the sustained performance economic and financial developments
of manufactured exports and the will need to be closely monitored and
higher growth in capital imports due to assessed in terms of their implications
continued expansion domestic private for the domestic growth and inflation
investment. The overall trade balance in outlook. Monetary policy will also
2016 is expected to continue to record continue to take into account the risk of
a surplus, albeit one that is smaller.
effects, however, will be partially offset The services account is projected to
by continued growth in income and record a narrower deficit on account
employment, as well as some support of an expected improvement in tourism
from Government measures targeted activity. Overall, the current account
at enhancing households’ disposable surplus is projected to narrow further
income. to 1.0 - 2.0% of gross national income
(GNI). On the supply side, all economic
In an environment of prolonged sectors are projected to expand, albeit
uncertainties and cautious business at a more moderate pace in 2016. The
sentiments, private sector investment services and manufacturing sectors
growth is projected to be slower will remain the key drivers of overall
compared to its performance in the past growth. Despite the lower oil and gas
five years. Capital expenditure in the prices, growth in the mining sector will
upstream mining sector will continue to be supported by new gas production
be affected by the environment of low capacity. Growth momentum in the
energy and commodity prices. Support construction sector is projected to
to private sector capital spending will moderate slightly in 2016 amid a modest
mainly stem from the implementation of expansion in both the residential and
on-going and new investment projects, non-residential sub-sectors.
particularly in the manufacturing and
services sectors. Headline inflation is projected to be
higher at 2.5 - 3.5% in 2016 (2015: 2.1%),
Reflecting the Government’s due mainly to increases in the prices
commitment to more prudent of several price-administered items
spending, growth of public sector and the weak ringgit exchange rate.
expenditure is also expected to be However, the impact of these cost
more moderate but would continue to factors on inflation will be mitigated by
be supportive of overall growth. Public the low global energy and commodity
investment is, however, projected prices, generally subdued global
to turn around to register a positive inflation and more moderate domestic
growth, reflecting higher spending by demand. The trajectory of inflation
the Federal Government on fixed assets during the year, however, could be
and the continued implementation of more volatile given the uncertainties
key infrastructure projects by public relating to global oil and commodity
corporations. prices as well as the pace of global
growth.
The external sector is expected
to remain resilient in 2016. Despite Economic and Monetary Management
subdued commodity prices, Malaysia’s in 2016
export performance is projected to
remain positive, in line with the modest Monetary policy in 2016 will focus on
improvement in external demand. The ensuring that monetary conditions
well-diversified nature of Malaysia’s remain supportive of sustainable
exports will continue to support the domestic growth with price stability,
overall growth in exports. Gross imports taking into consideration the evolving
are projected to expand further amid risks in the external and domestic
an increase in intermediate imports to environments. In particular, global
support the sustained performance economic and financial developments
of manufactured exports and the will need to be closely monitored and
higher growth in capital imports due to assessed in terms of their implications
continued expansion domestic private for the domestic growth and inflation
investment. The overall trade balance in outlook. Monetary policy will also
2016 is expected to continue to record continue to take into account the risk of
a surplus, albeit one that is smaller.
