Here are 2 impacts of Malaysia's 2013 budget

Budget 2013 is still 'expansionary, people-friendly and filled with ambitions,' said analyst.

According to OCBC, the Budget 2013 announcement this Friday is eagerly anticipated from 2 broad angles, namely the possible impact it may have on businesses and households and also the overall macroeconomic tone with regards to fiscal policy setting going into 2013.

Here's more from OCBC:

The government has received a wide-range of feedback from the public and the corporate world on several key issues, including corporate tax, housing prices as well the need for a GST system.

In the meantime, recent reports from a couple of credit rating agencies have highlighted the relatively high fiscal deficit level and increasing fiscal debt of the Malaysian government, as risks to Malaysia’s macro risk profile for the medium-term.

Starting from the macro view, it would be hardly surprising to us if the fiscal deficit/GDP ratio will be kept at around 4.5-5.0% for 2013 (with our current estimate at 4.6%), as compared to our estimated 5.2% and the government’s initial aim of 4.7% for 2012.

Several factors are behind our perspective on this matter but perhaps none more important than the fact that the global economy has arguably remained in shaky footing over the past few years. In the 18 months since January 2011, Malaysia’s export growth averaged about 7% yoy per month, while the gross contribution to GDP from exports averaged about 4 percentage point per quarter, below the respective 11% yoy and 6 percentage point chalked in the 18 months prior to the onset of the Lehman crisis.

With global growth likely to remain below trend in 2013, given the lackluster US economy, unsettled Eurozone and a moderation in China, we think that it is very important for the government to maintain an expansionary fiscal tone going into next year.

As a whole, when compared to Budget 2011 and Budget 2012, we think Budget 2013 will have a somewhat familiar ring to it: expansionary, people-friendly and filled with ambitions entrenched in the ETP.

We would like to stress once again that while we estimate Malaysia’s fiscal deficit at 4.6% of GDP for 2013, we see downside risks to this forecast given our corresponding 5.2% GDP growth forecast.