PUTRAJAYA is looking at tabling an expansionary budget for 2020 based on recent healthy indicators that promise more growth in the second quarter of the year, Finance Minister Lim Guan Eng said today.

He cited generally low and stable inflation amid robust economic growth, industrial production growth and increased exports, which had risen above market expectations.

“Exports in May 2019 increased 2.5% year-on-year, which came above market expectations.

“Wholesale and retail sales rose 5.6% and 8.2% year-on-year respectively in the January-May 2019 period.

“Vehicle sales for the first five months of 2019 rose 13% compared to the same period last year, indicating healthy domestic demand growth for the first half of the year.

“These indicators point towards a healthy second quarter GDP expansion, after the Malaysian economy grew sustainably at 4.5% year-on-year in the first quarter of 2019,” he said in a statement.

Lim added that the World Bank was projecting Malaysia’s GDP to grow 4.6% for 2019.

“The government will continue to prioritise economic growth and even consider an expansionary budget to ensure the public’s economic well-being and achieve our goal of shared prosperity,” he said.

He also dismissed fears of deflation, noting that inflation in June had increased to 1.5% year-on-year from 0.2% in May.

The acceleration in the Consumer Price Index for June, which rose by 1.5% year-on-year, was influenced by a change in the tax regime from GST to SST, Lim added.

In June 2018, the goods and services tax (GST) rate was zero-rated to fulfil a Pakatan Harapan manifesto pledge and it was subsequently replaced by the sales and service tax (SST).

Apart from the replacement of the GST with SST, the reduction of the retail price ceiling for RON95 from RM2.20 per litre to RM2.08 per litre helped to lower inflation and alleviate cost of living pressures faced by the public.

Lim said the government expected persistent and robust economic growth.

The budget for 2019, which was the Pakatan Harapan government’s first national budget, was RM314.6 billion, a rise of 8.3% from 2018. – July 26, 2019.