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BUDGET 2017 EXPECTATIONS

Friday,  22 July  2016/ TheSunDaily

http://www.thesundaily.my/news/1524163

IT’S that time of the year again when the Government is going to announce its annual budget plan. The market is losing its stamina and desperately in search of a growth story. So far this year, the FBM KLCI has been flat despite the volatility, which some might even say is “a positive” considering the global anaemic growth. Stocks have been less than inspiring. Oil and gas (O&G) stocks have been decimated. Export-oriented counters are flailing and property stocks are in search of a catalyst. Market observers reckon that fear continues to breed, fuelled by Germany’s Deutsche Bank woes, interest rate decisions by the Federal Reserve (Fed) and the United States presidential elections on Nov 8. Despite all these, there are little signs of a looming bear in the Malaysian market, perhaps due to the fact that most of the bad news has already been

discounted in the market. Malaysia’s economic growth was at its slowest in seven years at 4% during the April-to-June quarter of 2016 from 4.2% in the preceding quarter.

While Bank Negara is confident that Malaysia’s economy will be able to achieve a 4% gross domestic product (GDP) growth, some economists have cut their forecast to below 4% due to global woes. Its fiscal deficit commitment target for this year is 3.1% of the GDP from 3.2% in 2015. Economists are expecting it to improve further to 3% in 2017. Malaysia’s July exports declined more than expected on a slump in electrical and electronic exports and a drop in shipments to China, the country’s largest trade partner. Exports slumped 5.3% year-on-year to RM59.9bil compared to a survey of a 2.5% gain, while imports fell 4.8% to RM57.9bil compared to a survey for a 1.5% slide.

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