KUALA LUMPUR: As the 15th General Election (GE15) looms, Malaysia will likely table its biggest annual budget today to strengthen economic recovery and resilience.
The previous record was RM322.1 billion when the current administration tabled the 2022 Budget. Of this figure, RM75.6 billion was set for development expenditure and RM233.5 billion for operating expenditure.
It is widely expected that a bigger allocation would be used to build on the momentum of growth this year and lay the foundation for stronger recovery next year and beyond.
Some analysts have speculated that Prime Minister Datuk Seri Ismail Sabri Yaakob's administration would use the 2023 Budget to win over voters in GE15 with spending proposals, which may be heavy on feel-good items and light on new taxes.
However, others feel that the government may be more prudent given the cautious global economic outlook.
"It might not be an election budget as many expect, because the government has to be responsible and cannot be reckless given a cautious economic outlook next year. There will likely be measures to reduce subsidies and make them better targeted. At the same time, the budget will still provide assistance for the people and small businesses.
"The government will likely continue to stimulate and catalyse economic growth, as well as implement initiatives to reduce the people's burden," the source added.
Malaysia's gross domestic product (GDP) had grown 6.9 per cent in the first six months of this year, fuelled by an 8.9 per cent expansion in the second quarter ended June.
This was amid geopolitical tensions in Eastern Europe resulting in economic pressures on multiple fronts, most notably an increase in global inflation as commodity prices remained high.
The strong growth was helped by the transition to endemicity and reopening of Malaysia's international borders on April 1.
Expectations were high that the pace of GDP growth would be faster in the July-September quarter.
Hence, the government would likely announce an upward revision of GDP growth for this year, from the official forecast of 5.3 to 6.3 per cent.
However, the country's economic growth would likely moderate next year, in line with warnings from the World Bank and the International Monetary Fund of a global slowdown.
Meanwhile, industry observers said Malaysia's GDP growth had been trending upwards since the third quarter of last year
Citadel Group chairman and group chief executive officer Datuk Jeff S. Medina cited the country's monthly GDP changes of at least 4.4 per cent since December last year, indicating that it was positive.
"Malaysia's economy also seems to be on a healthy trend with no signs of stopping. Furthermore, Focus Economics Consensus Forecast panellists expect inflation to be 2.8 per cent this year, 0.3 percentage point lower than the 3.1 per cent expected average," he said in an email to the New Straits Times.
Medina said another positive indication of growth was the country's low unemployment rate, which was 3.7 per cent in July.
"This is nearing the full employment rate, which is, theoretically, the lowest possible rate of unemployment that may aid to avoid inflation. This, however, could also be a sign that inflation might increase from the second quarter of next year."
Based on the overall consensus of equity analysts, he said, corporate earnings in Malaysia were forecast to grow by 6.0 to 7.0 per cent next year. This lift could be higher if there was a further pick-up in China's economy.