Research Briefing | Nov 3, 2021

Malaysia | Fiscal stimulus primed to support the recovery

rb image for Fiscal stimulus primed to support the recovery

The government has announced a record spending plan in the 2022 Budget to spur the post pandemic recovery. Measures include an increase in cash aid and tax and financing support to households and businesses, as well as high multiplier infrastructure projects previously announced.

What you will learn from this report:

  • We estimate that the fiscal measures will add around 0.8ppts to GDP growth in 2022, boosting our forecast to 6.8%.
  • Despite the high spending projections, we forecast the deficit to narrow to 6.1% of GDP (from 6.7% this year) due to a rebound in revenues amid stronger economic growth and higher oil prices. The government also announced a one-off prosperity tax. While we believe most corporates will not meet the RM100 million revenue threshold, it may still dent investor sentiment in the short run.
  • Indeed, equities fell 2.2% after the announcement. But given we estimate Malaysian equities are around 20% undervalued and growth prospects are firming, we expect any risk off sentiment to be short lived.
Back to Resource Hub

Related Services

Post

South Africa: Elections 2024 | ‘Moonshot’ election scenario

This is the last of the four Research Briefings on scenarios for South Africa's general election on May 29. In this scenario, the centre-right opposition to the ANC, united in a coalition around the DA, secures enough votes to form a majority.

Find Out More

Post

Why the consumer recovery is delayed, not derailed

Latest data point to a delayed start to a consumer revival in the eurozone, but we see relatively low risk of it being derailed. Even with a slow start, it's unlikely to throw the rebound off course – plus there's a chance of make-up growth in H2. We expect private consumption to grow 1.2% in 2024 overall.

Find Out More