International finance management consulting firm, Nomura International (Hong Kong) Ltd is predicting the ruling Barisan Nasional government to be returned to power in the upcoming 13th General Election widely expected to be held in March next year.
Its South East Asian Economist, Euben Paracuelles, said the generous budgets announced in the last two years would help the ruling government to garner support from different sectors of the economy.
He noted that the fiscal policy would also be on an expansionary mode ahead of the election.
“Our assumption here is that the election gets called only in March (next year) and there is a bit of time for the government to implement more stimulus.
“But soon after the election, we think that the government needs to get back to a fiscal consolidation agenda very quickly,” he told a media conference.
Nomura International in its Asia Special Report suggested that the government recognised the need to get its medium-term fiscal consolidation back on track.
However, he said the fiscal consolidation would coincide with the slowdown in China in the second half of 2013, which may hurt Malaysia more than other countries due to its commodity exports.
Malaysia’s external demand would likely remain subdued next year as growth remains weak in the U.S. and Europe in the first half of next year and in China in the second half, which would have a bigger impact on local commodity exporters.
On the proposed goods and services tax (GST), Paracuelles said that the implementation of the GST would only come after the general election.