KUALA LUMPUR, Nov 6  – Malaysia’s current account balance is expected to record a lower surplus in 2021 at RM20.3 billion or 1.3 per cent of the gross national income (GNI), in line with the expansion in domestic industrial and investment activities, said the Ministry of Finance (MoF).

The ministry said surplus in the goods account is estimated to record RM113.3 billion, supported by a gradual recovery in global trade activities.

The deficit in the services account is anticipated to narrow to RM30.9 billion amid surplus in the travel account, it added.

"The travel account is expected to improve in 2021 as tourism activities recover gradually with receipts from travel accounts projected to increase to RM53.5 billion, driven by higher tourist arrivals and per capita spending abroad for leisure, business and pilgrimage purposes," said the MoF in its Economic Outlook 2021 report released today.

The ministry said gross payments for transport services are expected to increase to RM52.5 billion, attributed to the continued reliance on foreign transport services amid the expansion in trade activities.

Gross receipts are also anticipated to rise to RM20.3 billion, supported by improved earnings from air travel, as well as cargo handling and shipping services provided by domestic companies.

"A wider deficit is expected in the other services account in line with higher payments attributed to expansion in the manufacturing and construction sectors," said the ministry.

However, the primary income account is anticipated to record a large deficit of RM41.6 billion, following improvements in investment activities.

"This is in line with higher repatriation of profits and dividends by foreign investors and net outflows of compensation for foreign professionals."

Net outflows in the secondary account are projected to widen to RM20.6 billion as remittances by foreign workers will more than offset inflows, following the anticipated recovery in domestic economic activities, said the ministry.

For 2020, the MoF said the current account surplus is expected to narrow to RM48.5 billion or 3.4 per cent of GNI in 2020, primarily due to the widening deficit in the services account, despite a higher surplus in the goods account and a lower deficit in the income account.

The goods account is anticipated to record a higher surplus of RM130.9 billion as exports are projected to outpace imports.

Meanwhile, the services account is expected to post a wider deficit of RM50.3 billion, mainly due to the decline in receipts in the travel and transport accounts.

The ministry said the travel account is anticipated to record a deficit of RM10.9 billion for the first time since 1989, on account of a significant decline in tourist arrivals as international borders are closed to contain COVID-19 pandemic.

The deficit in the transport account is projected to reach RM26.8 billion due to the lower earnings from freight charges, airline passenger fares, airport and port charges such as aircraft landing and parking, ship docking and cargo handling provided by domestic companies.

Meanwhile, the other services account is expected to record a lower deficit due to declining outflow of payments for construction, financial as well as maintenance and repair services, it said.

The MoF said the primary income account is projected to register a lower deficit of RM23.7 billion this year, mainly with lower payments accruing to foreign direct investors in Malaysia due to sluggish performance by the construction and manufacturing sectors.

"The investment income payments are expected to record a decline of RM65.6 billion. Compensation of employees is expected to record a smaller deficit following a larger decline in payments, reflecting slower domestic economic activities."

The ministry said the outflows of secondary income account, which primarily consists of remittances, are expected to decline to RM34.6 billion this year, as the income of foreign workers is affected during the movement control order.

At the same time, inflows of secondary income account are anticipated to increase to RM26.1 billion, following a one-off receipt, contributing to a lower deficit of RM8.5 billion in secondary income account. 

-- BERNAMA