The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
TA Securities Holdings Bhd expects Budget 2025 to feature an allocation of RM403.7 billion, with RM305.7 billion allocated for operating expenditure and RM97.9 billion for development expenditure. This forecast suggests a reduction in the fiscal deficit to 3.7% of GDP in 2025, down from a projected 4.2% in 2024, moving towards the government's 3.5% target by 2026.
The growth in government revenue, forecasted to rise 5.7% to RM325.3 billion, will be driven by increases in both direct and indirect taxes, as the economy expands at an expected rate of 5% in 2025. The services and manufacturing sectors, along with wage increases and private investments, are projected to support this growth.
Key initiatives in Budget 2025 are expected to include measures supporting public infrastructure projects like the Mass Rapid Transit 3 (MRT3) and high-speed rail (HSR), digital economy investments, and sustainable development related to energy transition. Additionally, sectors like semiconductors, artificial intelligence, and 5G will receive attention.
The budget may also introduce measures to increase disposable income, such as potential civil servant salary increases and adjustments to the minimum wage. No significant new taxes are anticipated, except for the global minimum tax and a phased implementation of e-invoicing and sales and services tax expansions.
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