KUALA LUMPUR: 2020 Budget has been designed to brace for rough times, said AmBank Group chief economist Dr Anthony Dass.
He said it remains an expansionary policy and may be able to counter current external headwinds such as slower economic growth, US-China trade tensions and global uncertainties posed by factors like instability in the Middle East.
“The government has provided a clearer direction on its vision and is focusing on sustainable growth,” he said in a note.
Dass said the economic growth, which the government projected at 4.8 per cent for 2020, is expected to come from services and construction supported by higher production from agriculture and mining with manufacturing moderating.
“However, our growth projection for 2020 is at four per cent with the upside at 4.3 per cent on the back of a slower global gross domestic product (GDP) at 2.8 per cent though our fiscal deficit of 3.2 per cent of GDP is within the government’s projection,” he said.
On fixed income, with the fiscal deficit that requires RM51.7 billion in financing, Dass expected the supply of govvies to be around RM125 billion for 2020 without taking into consideration of the switch auction that can trim maturities in 2020 and any potential new issuance of Samurai bonds.
For 2019, Dass expected the supply of govvies in 2019 to reduce slightly to RM115 billion due to the issuance of government’s Samurai bonds worth ¥200 billion.