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Budget 2023 has recovery efforts, economic resilience in sight

Themed 'Keluarga Malaysia, Makmur Bersama', the budget will focus on four main areas – people, business, economy and government.

3 minute read
An aerial view of Kuala Lumpur's housing and commercial sectors from Ampang in Selangor.
An aerial view of Kuala Lumpur's housing and commercial sectors from Ampang in Selangor.

The budget for 2023 to be unveiled by the government on Oct 7 will focus on efforts to strengthen the country's recovery and economic resilience, as well as to implement comprehensive reforms.

Themed "Keluarga Malaysia, Makmur Bersama", the budget will narrow in on four main areas – people, business, economy and government – to be drafted following engagement sessions with stakeholders.  

The initiatives implemented through these cores will be aimed at dealing with the cost of living, increasing income and employment opportunities, improving business facilities and the competitiveness of SMEs, restoring the tourism industry, and driving digitisation and automation.

The finance ministry will also focus on promoting green growth and sustainable development, addressing food security issues, improving public services, as well as improving disaster risk management and strengthening public health resilience.

In efforts to ensure that the economic reforms benefit all, the ministry has received as many as 242 memorandums from industry players, NGOs, and civil society organisations, and conducted some 190 engagement sessions with state governments, ministries and relevant sectors.

The government also opened a section for suggestions and published six public consultation papers on the finance ministry's website, receiving a total of 5,419 suggestions for the budget.

"The economy has shown a strong post-Covid recovery in 2022," the ministry said in a pre-budget media briefing.

However, "the outlook for 2023 is increasingly uncertain due to global developments such as the ongoing conflict in Ukraine, high commodity and food prices globally, supply chain disruptions, and high inflation which has prompted the tightening of monetary policy and a lower global growth outlook.

"Therefore, Budget 2023 will need to enhance Malaysia's recovery while safeguarding the people and businesses against current and future challenges."

In terms of economic performance, Malaysia's GDP appears to be on track to reaching or exceeding the 5.3%-6.3% projected for 2022.

In the second quarter of 2022, it recorded a growth of 8.9%, up from 5.0% in the first quarter.

The unemployment rate meanwhile decreased to 3.9% in the second quarter from 4.1%.

Malaysia also recorded total foreign direct investments of RM41.7 billion.

Nevertheless, the global economic environment is expected to become more challenging next year with the International Monetary Fund (IMF) revising the world economic forecast for 2022 and 2023.

In July, the IMF revised the world economic growth forecast downwards to 3.2% for 2022 compared to 4.4% in January.

For 2023, meanwhile, global economic growth was revised to 2.9% from 3.8%.

In terms of the inflation rate, the government's efforts, especially through the provision of subsidies amounting to RM77.7 billion, succeeded in easing inflationary pressures to 3.4% as of June 2022 – a figure expected to hit 11.7% in the absence of subsidies and price controls.

As a result, Malaysia's inflation rate has been ranked as among the best compared to neighbouring countries such as Indonesia (6.7%), the Philippines (7.7%) and Thailand (9.4%).

On the achievements of Budget 2022 as of Aug 31, the government distributed RM7.15 billion through the Bantuan Keluarga Malaysia initiative, benefitting more than 8.6 million recipients.

The RM150 e-Starter programme worth RM266.03 million meanwhile was distributed to nearly 1.8 million recipients while the JaminKerja initiative through MySTEP worth RM101.43 million benefited a total of 11,703 job seekers.