CONFIDENT: Research house projects stronger economic growth of 5.8pc
KUALA LUMPUR: MIDF Research is confident that the targeted economic growth of 4.5 per cent to 5.5 per cent as well as the budget deficit of four per cent of gross domestic product (GDP) in 2013, is achievable.
The figures were announced by Prime Minister Datuk Seri Najib Razak while presenting next year's budget in Parliament on Friday.
"In fact we have projected a stronger economic growth of 5.8 per cent in 2013, while looking at a budget deficit of four per cent to 4.3 per cent, with room to dipping below the four per cent threshold mark," it said in a research note yesterday.
MIDF said domestic demand will still be the main driver of economic growth with private consumption at the helm.
Among the factors lending support to private consumption are a healthy labour market, better income growth from the domestic and export sectors as well as commodities, strong real disposable income on the back of low inflation and financial assistance to lower income households.
On the equity market, MIDF said despite no material surprise from the recent budget, it expects the market to retain its upward momentum, supported by the still rising tide of external liquidity as attested by the continued inflow of foreign funds.
The research house said the construction sector will see double-digit growth again next year to 11.2 per cent, compared with 15.5 per cent this year, despite no surprises in the form of new project announcements in Budget 2013.
Going forward, MIDF believes the government will continue to focus on awarding and executing big-ticket projects, to meet its double-digit growth target.
Among the projects are the West Coast Expressway, the Mass Rapid Transit 2 and 3 lines, Southern Double Tracking, Prai Power plant, and the Langat 2 treatment plant.
The property sector, it said, may see demand shift to the affordable segment.
"We foresee higher demand for properties priced below RM400,000 due to a further extension of stamp duty exemption on the instrument of transfer agreements and loan agreements for the purchase of the first residential property as well as a higher income limit for My First Home Scheme,"
The research house was not surprised with the revision to the real property gains tax as it had been widely speculated, and was crucial for the long-term sustainability of the property sector, with uncontrolled property speculation activities leading to a property bubble.
MIDF said various goodies given by the government in an effort to tackle the rising cost of living via an increase in the rakyat's disposable income would have a positive impact on the consumer sector.
However, as the "handouts" are done in small pockets across the economy, it is unlikely to significantly improve the people's wealth or consumer confidence to the extent of creating significant growth in the sector, it added.
The research house has kept a "positive" outlook on the construction sector as well as oil and gas, and healthcare.
The research house also maintained a "neutral" view on the property, consumer, building material as well as healthcare, banking, plantation, aviation, tobacco, telecommunication and automotive sectors. Bernama