KUALA LUMPUR (Oct 3): The new Pakatan Harapan government's inaugural budget to be tabled on Nov 2 is expected to stay the course of fiscal and debt consolidation.

In a Budget 2019 Preview today, UOB Global Economics & Markets Research senior economist Julia Goh said the size of the budget deficit will depend to a large extent on the sales and service tax (SST) revenues collected, size of refunds for goods and services tax (GST) input tax credits, income tax and RPGT, asset monetisation, oil revenues, and degree of cuts in operating expenditure.

She explained that the cash aid and fuel subsidies are likely to be reviewed to make it more targeted.

"We do not expect any adjustments in the corporate and individual income tax rates.

"New taxes such as soda or digital economy taxes are possible but we think bulk of efforts would focus on trimming unproductive spending," she said.

Goh said given lingering risks on the global front and signs that the domestic economy is moderating, she expects the new government to announce measures to spur investments and growth.

"This includes initiatives to incentivise automation and modernisation, industry 4.0, and higher value-added segments.

"Areas of focus are likely to be affordable housing, automotive, transportation, tourism, e-commerce, and renewable energy," she said.

Goh said she is projecting the fiscal deficit at -3.0% of GDP (from estimate of -2.8% in 2018).

"This is premised on real GDP growth of 4.8% in 2018-19.

"Measures to restructure the government's overall debt and pare down the size of contingent liabilities will be ringgit positive," she said.