Source: MoF

KUALA LUMPUR, Oct 11 -- The agriculture sector is forecast to expand 3.4 per cent in 2020 with growth largely emanating from higher output of plantation, livestock and other agriculture subsectors, according to the Economic Outlook 2020 report released by the Ministry of Finance (MoF).

This is slightly lower than the favourable performance of 4.9 per cent for the first half of 2019 and 4.3 per cent expected for the year, due to a rebound in production of crude palm oil (CPO) and natural rubber coupled with higher output of livestock and other agriculture subsectors.

“The oil palm subsector, the largest contributor to the agriculture sector is projected to turn around 7.7 per cent in 2019, before normalising to 5.5 per cent in 2020. The better performance of the subsector is mainly due to favourable weather conditions and expansion in oil palm matured areas,” the report said.

Furthermore, it said exports of CPO are expected to improve following the downward revision on import tariff by India and the expectation of higher demand from other major markets such as China, Singapore and the United States.

In addition, the bilateral trade deal with China is expected to increase exports of palm oil by 1.9 million tonnes worth RM4.6 billion between 2019 and 2023, supporting the performance of the subsector.

Hence, the palm oil stockpile is projected to ease to 2.5 million tonnes in 2019 and decline further to 2.4 million tonnes in 2020.

During the first quarter of 2019, the price of CPO fetched RM2,015 per tonne with inventory recording almost three million tonnes and for the whole year, the commodity’s price is expected to remain subdued at RM2,000 per tonne before improving to RM2,100 per tonne.

“As for the rubber subsector export, it is projected to rebound by 7.3 per cent in 2019 and expand by 4.4 per cent in 2020, with prospects for the rubber subsector in the near-term expected to be favourable due to tight supply conditions in major rubber producing countries.

“The livestock subsector is estimated to expand by 5.6 per cent in 2019 and 5.1 per cent in 2020 due to rising demand from both domestic and export markets,” the report said.

Meanwhile, the mining sector is forecast to record a marginal growth of 0.3 per cent, supported by stable gas production following stronger domestic demand from the petrochemical industry as well as rising exports of liquefied natural gas, particularly to China, Japan and South Korea.

This subsector is expected to benefit from the commencement of the North Malay Basin Full Field Development in Peninsular Malaysia, as well as Gorek, Integrated Bokor (Phase 3) and Betty redevelopment projects in Sarawak.

On the price of crude oil the report noted that it would be affected by the global growth uncertainty; production cut by the Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC; oil production by the US; US-China trade tensions; and geopolitical risks (in Iran, Iraq, Libya and Venezuela).

-- BERNAMA