KUALA LUMPUR: The MADANI Government is optimistic that it can achieve stronger gross domestic product growth of four to five percent in 2024 because of the solid foundation and changes outlined in the MADANI Economy and Budget 2024.
The government will expedite the implementation of the MADANI Economy framework in order to spark new economic growth and bring about social reform and justice, according to Prime Minister Datuk Seri Anwar Ibrahim, who is also the Finance Minister.
"The government is determined to further narrow the fiscal deficit to 4.3 per cent this year, in line with commitments in the Public Finances and Fiscal Responsibility Act 2023. The government has successfully reduced its fiscal deficit to 5 per cent in 2023 from 5.6 per cent in 2022," he said in a statement issued by the Ministry of Finance (MoF) today.
According to Anwar, the ongoing increase in domestic demand is a sign that the MADANI government's reform plan is beginning to have an impact.
"Aside from the ongoing fiscal restructuring, which mutually benefits the government and the rakyat, efforts to enhance governance and ease of doing business have stimulated economic activities and progressively restored investor confidence in Malaysia," he added.
It was noted that in Q4 2023, net foreign direct investment was RM17.1 billion (compared to RM7.2 billion in Q3 2023).
Meanwhile, the MoF said that the MADANI Economy Framework emphasises how critical it is to restructure Malaysia's economy in order to solve systemic, historical issues while simultaneously concentrating on fresh opportunities for resilience and sustainable growth.
Budget 2024, on the other hand, firmly highlights the government's commitment to responsible fiscal management and subsidy rationalisation, the MOF said, adding that savings from these will be channelled to the vulnerable communities and the rakyat based on needs, as well as improve public infrastructure and services.
The National Energy Transition Roadmap, New Industrial Master Plan 2030, and Mid-Term Review of the 12th Malaysia Plan all contain strategies and measures that are intended to encourage quality investments in high-value-added industries, particularly in the energy transition, digital, and high-technology sectors, with the ultimate goal of producing more high-paying jobs for the rakyat.
Commenting on the 2023 GDP that was revealed today, the MOF said that after a robust 8.7 per cent growth in 2022, Malaysia's economic development slowed to 3.7 per cent in 2023, which was somewhat less than the 4.0 per cent estimate from the Budget for 2024.
Malaysia's economy expanded by 3.0 per cent in the fourth quarter of 2023 (Q4 2023) despite a difficult foreign environment, according to the ministry. This growth was fueled by strong domestic demand, which increased by 5.2 per cent during the period (Q3 2023: 4.8 per cent).
This lessened the 3.2 per cent fall in Malaysia's trade as exports weakened due to a slowdown in worldwide demand.
According to the MoF, improved economic fundamentals, including the labor market, which saw positive growth momentum in Q4 2023, helped to underpin Q4 2023 growth. In Q42023, the unemployment rate dropped to 3.3 per cent, which was below the pre-pandemic level (Q3 2023: 3.4 per cent).
Inflation tapered to 1.6 per cent (Q3 2023: 2 per cent), lending credence that the government's strategy to rationalise subsidies had not caused a shock to the overall economy.
"For the month of December 2023, the headline inflation rate moderated to 1.5 per cent. This is lower than other more developed and regional economies such as the Eurozone (2.9 per cent), South Korea (3.2 per cent), the United States (3.4 per cent), the Philippines (3.9 per cent), and Indonesia (2.6 per cent)," it said.