KUALA LUMPUR: Malaysia’s economy is on track to grow between 5.0 and 5.5 per cent per annum for the remainder of the 12th Malaysia Plan (12MP), driven by domestic demand, particularly private sector expenditure.
According to the Mid-Term Review of the 12th Malaysia Plan (12MP MTR) 2021-2025 report, tabled in Parliament today, the gross national income (GNI) per capita in current prices is projected to increase by 4.6 per cent per annum to RM61,000 or US$14,250 in 2025.
Malaysia’s potential output is projected to expand between 5.5 and 6.0 per cent per annum under the 12MP attributed to higher productivity.
During the review period of 2021-2022, the report stated that potential output expanded by 3.8 per cent per annum, while gross domestic product (GDP) grew by 5.9 per cent per annum, contributed by better labour productivity growth of 3.7 per cent per annum.
In 2023, the Malaysian economy is projected to expand close to the lower end of the 4.0 to 5.0 per cent range.
"Inflation elevated to 3.3 per cent in 2022. GNI per capita in current prices was higher at RM52,968 (US$12,035) in 2022 compared with RM42,838 (US$10,191) in 2020.
"During the review period, seven out of the 12 macroeconomic targets were achieved, four are on track, while the remaining one is lagging. In addition, four out of the eight multidimensional goals were achieved,” it said.
The report said private consumption is anticipated to increase at an average annual rate of 6.1 per cent, supported by improvement in labour market conditions with the economy to remain in full employment and the inflation rate is expected to remain manageable.
Meanwhile, the construction sector is expected to rebound supported by stronger growth in the civil engineering and residential building subsectors.
On sectoral reforms, the report said it will be accelerated by boosting the high-growth, high-value (HGHV) industries related to energy; technology and digitalisation; electronics & electrical (E&E); agriculture and agro-based; and non-radioactive rare earth.
"These five HGHV industries have been identified as part of the Big Bolds in the Mid-Term Review of the 12MP. The implementation of the reform through these Big Bolds is expected to support the targeted growth of all sectors,” it said.
The report also stated that the services sector is expected to grow at an annual average rate of 5.7 per cent, particularly led by consumer-related activities such as in retail trade, accommodation, and food and beverage subsectors.
It added that efforts will also be undertaken to increase the contribution of the modern services subsector by focusing on the ICT services industry and leveraging on financial technology, as one of the initiatives under the Big Bold Digital- and Technology-based HGHV Industry.
Meanwhile, the report stated that the electricity subsector will be enhanced by increasing renewable energy (RE) capacity with a target of 31 per cent in 2025, in line with the Big Bold HGHV Industry based on Energy Transition.
The manufacturing sector, on the other hand, is expected to grow by 4.9 per cent per annum, with priority to be given to accelerating the transition towards new sources of growth within the sector, particularly in E&E.
"Measures will be undertaken to intensify the production of high value-added and complex products by fostering advanced front-end manufacturing activities and strengthening the overall ecosystem, particularly in integrated circuit (IC) design, IC packaging, wafer fabrication, embedded system, testing service and design engineering.
"Efforts will also be undertaken on strengthening knowledge-intensive industries, including the machinery and equipment (M&E), petroleum as well as chemicals and chemical products to support the growth.
"Low carbon mobility initiative will also be enhanced through production and installation of energy-efficient vehicles, including electric and hybrid vehicles,” it said.
The agriculture sector is projected to grow moderately by 2.7 per cent per annum, mainly due to continuously low production of crude palm oil, while the construction sector is expected to grow at an annual average rate of 6.7 per cent, mainly driven by the civil engineering and residential building subsectors.
The mining sector, on the other hand, is expected to grow by 3.1 per cent per annum, mainly driven by the increase in natural gas production.
According to the report, private investment is expected to grow by 6.4 per cent per annum or an average of RM301 billion per year in current prices, supported by faster implementation of new and ongoing projects across key economic sectors.
Public investment is expected to grow by 3.9 per cent per annum or an average of RM83 billion per year in current prices, attributed to the federal government’s development expenditure and capital expenditure by non-financial public enterprises, it said.
Gross exports are projected to moderate by 3.7 per cent per annum, in line with global trade prospects, while gross imports are projected to grow by 3.6 per cent per annum due to steady increases of intermediate and capital goods in supporting manufacturing and investment activities.
The report stated that overall, the trade balance is projected to reach RM290 billion in 2025.
Inflation is expected to be between 2.8 and 3.8 per cent per annum, attributed to the gradual implementation of a targeted subsidy, stronger domestic demand and improvement in the labour market, said the report.
"Efforts will be strengthened to contain inflationary pressures by increasing the stocks of various food items as well as improving distribution efficiency in ensuring undisrupted supply,” it said.
Concerted measures will also be undertaken in addressing price issues to improve purchasing power and the well-being of the rakyat, especially vulnerable groups.
"In easing the burden of the rakyat, the existing mechanism will be reviewed by providing a comprehensive and inclusive social protection system.
"Measures will be undertaken to develop an integrated database to improve subsidy targeting mechanism, streamline delivery channels and enable implementation of targeted programmes, including the introduction of a progressive wage policy,” it said. = Bernama
