PUTRAJAYA: Malaysia’s economic growth target of between 5% and 6% for 2015 is still achievable, said Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar, although it is now expected to come in at the lower end of the forecast.

He said the structure of the economy is still “sound and diversified”, as the government has gradually reduced its dependency on oil and gas (O&G) revenue to 31% last year from 40% in 2009.

“As we move forward, and with the implementation of the goods and services tax (GST) next year, that ratio will drop further to 30% and possibly below. The impact [of falling oil prices] on the Malaysian economy will still be manageable,” he told reporters after launching the World Bank’s Malaysia Economic Monitor yesterday.

“I believe the country’s economic growth target of between 5% and 6% (for 2015) is still achievable, albeit [it will come in] at the lower end of the range,” he said.

Meanwhile, Abdul Wahid is of the view that the negative sentiment toward falling oil prices is a boon to global economic growth. Brent crude oil traded below US$60 (RM210) a barrel yesterday, near 5½-year lows.

“Recent research suggests that lower oil price will generally be a boon to the global economy. In fact, the research also predicted that the drop in oil price will translate into growth improvement of 0.4% to the global economy,” he said.

Taking Malaysia as an example, Abdul Wahid noted that despite the drop in O&G revenue, the government stands to benefit from savings of between RM10 billion and RM12 billion per year from the removal of the fuel subsidy.

He, however, declined to provide the level at which crude oil price is at the most comfortable to meet the government’s fiscal deficit target.

“You should not react to the daily movement of the oil price, but you need to look first at the fundamentals of the country’s economy,” he said.

As for the country’s fiscal deficit management, Abdul Wahid said there is enough momentum to ensure that the country will continue to have current account surpluses in 2015 and 2016.

“In the first nine months of this year, we have recorded RM41 billion in terms of current account surplus, and we believe that it is already at 4.1%, given the size of our gross domestic product (GDP) which stands at RM1 trillion,” he said.

Malaysia expects to trim its fiscal deficit to 3.5% of GDP this year, down from 6.7% in 2009.

“Our target to reduce the deficit to 3% next year remains on track. This is driven by the broad-based tax system [GST], subsidy rationalisation measures and other mechanisms that we have set in place,” he added.

This article first appeared in The Edge Financial Daily, on December 18, 2014.