KUALA LUMPUR, Dec 21 — Economic recovery in Malaysia is expected to gain momentum in 2022, with the World Bank projecting the economy to grow by 5.8 per cent, mainly driven by an acceleration in private consumption.
The report also said that rigid operating expenditures, namely emoluments, retirement charges, and debt service payments, have grown markedly over time and are expected to take up two-thirds of Federal Government revenue next year, increasing fiscal rigidity and crowding out discretionary spending. The World Bank said this reflects headwinds from the resurgence of Covid-19, continued supply disruptions and diminished macroeconomic support.
“However, in the short term, improving the targeting of social spending and at the same time phasing out generalised and regressive subsidies, such as fuel subsidies, will help raise the efficiency of government spending. “Informal workers were also among the worst hit and have been more susceptible to income losses. Moreover, despite receiving government assistance, households still had to use personal savings and reduce consumption to cope with the financial challenges,” the report said.
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