Macroeconomic Forecast Malaysia

Having announced two fiscal stimulus packages amounting to MYR67bn (US$19bn) or roughly 10% of GDP, the government's finances are in poor shape and we are not expecting the administration to be able to balance its budget over the next five years. Although there are indications that the government is considering the implementation of a goods and services tax, the tax is unlikely to be in place within the next couple of years, pending more groundwork. As such, we are projecting a large budget deficit amounting to 7.9% of GDP in 2009. Subsequently, we expect the budget deficit to average around 6.4% over the coming five years.

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