BUDGET 2021 will not deviate much from the previous budgets’ convention but will be infused with initiatives similar in spirit to the PRIHATIN Rakyat Economic Stimulus Package (PRIHATIN) and National Economic Recovery Plan (PENJANA), according to an economic expert.
“The upcoming national budget will still hinge on aspects such as jobs and people’s income,” Universiti Kebangsaan Malaysia’s Economics and Management faculty Prof Dr Jamal Othman said during a Ruang Bicara session aired on Bernama TV yesterday.
According to him, the government’s focus will not directly be on the gross domestic product (GDP) per se but the GDP will see the effect when the government addresses more pressing matters such as jobs.
“Faced with the Covid-19 pandemic situation, I think the issue of economic growth is not the highest priority; what’s more important is to protect our ability to continue with our lives (as usual), which is inextricably linked to income. Economic growth will come later on,” he said.
Jamal forecasts the budget deficit would widen from 5.5% to 6% of GDP, which he said would not be unusual given the challenging global economic situation this year due to the pandemic.
He said countries with an open economy would naturally be worse affected, and this could be seen in the drop in the country’s exports, which led to the dependence on domestic consumption for recovery.
“Unfortunately, that was also affected due to people having lost their jobs,” Jamal said.
“However, the declining unemployment rate signalled that the implementation of the PRIHATIN and PENJANA initiatives were producing positive results,” he added.
The country’s unemployment rate fell to 4.7% in July, which was down from 4.9% in June and 5.3% in May.
As of Sept 25, the government had implemented one-off cash assistances and three- to six-month initiatives worth RM122.7 bil under PRIHATIN. – Oct 10, 2020