Despite uncertainties in the global economy, the Pakatan Harapan Government expects GDP to grow 4.9% in 2019, according to Finance Minister Lim Guan Eng during his Budget 2019 speech just now.

For this year, real GDP is forecast to expand 4.8%, after it grew by 4.9% in the January-June period.

According to Economic Report 2019 released earlier today, underpinning the firm growth are sound domestic demand, steady global growth and trade, continuous expansion in the electrical and electronics and also higher crude oil prices.

“Despite the resilient economic performance, risks to growth are tilted downside emanating from heightening uncertainties in the global environment, including rising trade conflict, volatility in global financial markets and oil prices as well geopolitical tension,” it said.

Domestic demand growth is expected to dip from 5% this year to 4.9% next year. 

Underpinning the growth will be sustained private sector expenditure at 6.5% this year before it dips to 6.4% next year.

Private sector expenditure will remain the key driver of growth and the government expects this to cushion the impacts of lower public sector financing this year and next as the government reins in its expenditure.

Private consumption, which accounts for 55% of GDP, will be supported by stable employment and wage growth, conducive financing condition and benign inflation.

Private consumption will continue to power growth, expanding by 7.2% this year but grow at a slower pace of 6.8% next year.

Private investment will continue with funds channeled into the services and manufacturing sectors. This sector is expected to grow by 4.5% this year – accounting for 17.3% of GDP.

The government’s move to rein in the deficit and trim its expenditure would see a reduction in public expenditure and this will further decline to 0.9% next year from a marginal growth of 0.1% this year.

The main reasons are due to lower investment by public corporations, the report says.

Public consumption is forecast to expand marginally by 1% this year and grow by 1.8% next year due to higher spending on emoluments, supplies and services.

Public investment will continue to slow down to 1.5% this year and sharply by 5.4% next year mainly due to lower spending by public corporations.

GNI in current prices is expected to grow by 5.6%  this year to RM1.4 trillion.

Gross national savings (GNS) is forecast to expand by just 0.4% to RM387.8 billion – where the private sector will account for 82% of total savings. 

The savings-investment gap is expected to exceed total investment, hence the savings-investment gap should record a surplus of 2.5% and 3% of GNI “enabling Malaysia to continue to finance its growth primarily from domestic sources.

For 2019, the services sector is expected to expand at a slower pace of 5.9% from 6.3% this year while manufacturing will grow at 4.7% from 4.9%.

Mining is expected to see a rebound to 0.7% growth from a decline of 0.6%. Agriculture is forecast to jump to 3.1% from a decline of 0.2%. Construction is expected to expand by 4.7% from 4.5%.

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