KUALA LUMPUR (Oct 1): Hong Leong IB Research (HLIB Research) expects the consumer sector to be the likely winner in the upcoming 2016 Budget. This expectation is based on the Eleventh Malaysia Plan (11MP) strategies with additional measures to safeguard growth amid global and domestic challenges.

In a note today, the research house said it expects the Budget to be mildly expansionary with modest assumptions (GDP 4%–5%, fiscal deficit 3% and inflation 2%–3%) as well as progress of goods and services tax collection and review of minimum wage policy.

With Budget 2016 slated for tabulation on Oct 23, HLIB Research expects the government to unveil a slew of new initiatives/measures that will collaborate with the strategies outlined in the 11MP (2016–2020) to achieve a high-income nation status and balanced budget by 2020.

HLIB Research anticipates further operational expenditure cut but development expenditure to be sustained to uphold growth.

The research house said the Budget would include measures to tackle rising costs of living (higher BR1M and minimum wage, optional employees' EPF contribution cut) to raise household disposable income by RM5.3 billion in 2016.

"Neutral to overall market, unlikely to mitigate uncertainties impacting sentiment.

"Consumer sector winner from additional disposable income which could revive consumer sentiment and sustain demand, albeit benefiting staple rather than durable goods.

"Construction also stands to benefit but believe catalyst for would be actual contract awards in 2016.

"Healthcare likely positive for pharmaceutical, mixed for private healthcare," it said.

HLIB Research said "Sin" tax hike was unlikely.