ECONOMIC REPORT Following are highlights of the 2015/2016 Economic Report issued by the Finance Ministry in conjunction with the tabling of the 2016 Budget today by Prime Minister Najib Abdul Razak, who is also Finance Minister.

• Goods and Services Tax (GST) to rake in RM39 billion in 2016 (3.1 percent of GDP) (2015: estimated RM27 billion from April).
• Malaysia's GDP to remain on a steady growth in 2016, to expand between 4.0 percent and 5.0 percent (2015: 4.5-5.5 percent).
• Growth in Malaysian economy to be driven by domestic demand with private expenditure to remain the main anchor.
• Malaysia's fiscal deficit is projected to decline to RM38.8 billion or 3.1 percent of GDP in 2016 (2015: 3.2 percent).
• Federal government revenue collection next year to grow marginally by 1.4 percent to RM225.7 billion, largely due to higher collection of tax revenue.
• Oil-related revenue to drop 14.1 percent in 2016 due to lower global crude oil prices (2015: 19.7 percent).
• The federal government expenditure to increase 1.7 percent to RM265.2 billion in 2016 (2015: RM260.7 billion).
• Of the RM265.2 billion Federal government expenditure, 81.1 percent allocated for operating expenditure while 18.9 percent for development expenditure.
• Operating expenditure in 2016 to increase marginally by 0.9 percent following continuous efforts to rationalise and optimise government spending.
• The development expenditure is expected to rise 5.4 percent next year, of which RM30.3 billion would go to the economic sector.
• The security sector would be provided RM5 billion in 2016 to enhance the capability of the armed forces and police.
• A total of RM1.6 billion would be allocated next year for general administration sector for upgrading of government facilities nationwide.
• Domestic demand is expected to register a growth of 5.5 percent this year driven by private sector spending.
• Private investment to increase 6.7 percent in 2016 with the bulk of investment in the manufacturing and services sectors.
• Private consumption is anticipated to expand 6.4 percent in 2016, benefitting from stable employment prospects and favourable wage growth.
• Public investment to record a higher growth of 2.3 percent in 2016 from 1.6 percent expected this year supported by new projects under the Economic Transformation Programme and 11 Malaysia Plan and the ongoing projects under the 10 Malaysia Plan.
• Services sector is projected to grow 5.4 percent in 2016 and increase its share to 54 percent of GDP from 53.8 percent this year with all sub-sectors continuing to expand.
• Inflation to remain stable at two to three percent in 2016 (2015: 2.0-2.5 percent).
• Nominal GNI per capita to increase 5.6 percent to RM38,438 next year from 4.2 percent anticipated growth to RM36,397 this year.
• Malaysia’s current account to post a surplus in the range of 0.5 percent to 1.5 percent of GNI compared with a surplus of 1.5-2.5 percent expected this year.
• Gross exports are expected to rebound 1.4 percent in 2016 from a 0.7 percent contraction this year, supported by higher public investment and capital spending in the manufacturing and services sectors.
• Malaysia’s 2016 external position to remain encouraging in line with better growth prospects for regional and advanced economies, reinforced by steady expansion in the domestic economy.
• The outlook for world trade is projected to improve next year.
• The deficit in the services account next year is expected to improve to RM11.4 billion from RM14.7 billion this year.
• The federal government debt remains within prudent limits, and is well capped at 55 percent to GDP, placing Malaysia among medium-indebted countries.
• Offshore borrowings remained manageable at 1.6 percent of GDP, despite the appreciation of the US dollar.
• Malaysia’s financial system remains strong this year despite heightened challenges, i.e declining commodity prices and weakening ringgit.
• The East Coast Economic Region (ECER) has attracted RM78 billion in investments since its inception in 2007, accounting for 71 percent of the RM110 billion target by 2020.
• Insurance and Takaful Industry performance remains resilient with strong capitalisation and improved profitability.
• Trade surplus is expected to be higher at RM85.3 billion or 7.3 percent of gross domestic product (GDP) in 2015 (2014: RM82.5 billion; 7.5 per cent).
• Government commits to improve and strengthen the Islamic financial market, as part of its strategies to develop and prosper the nation.
• Agriculture to pick up in second half 2015 on higher palm oil, rubber output.
• Asean to set up working committee to enhance financial inclusion.

- Bernama