PUTRAJAYA, June 15 — Malaysia must brace against economic “headwinds” that may hamper the country’s growth and income, Prime Minister Datuk Seri Najib Razak said today.

Najib also said the Malaysian economy will be affected by the high household debt at 87.6 per cent of the gross domestic product (GDP), but noted that this was growing at a slower pace and with a substantial amount involving loans to purchase assets and properties.

“Commodity prices, particularly crude oil, LNG (liquefied natural gas) and palm oil are anticipated to remain soft while private consumption will see some moderation due to the one-off inflationary pressures with the implementation of Goods and Services Tax (GST),” Najib, who is also finance minister, said in his keynote speech ahead of a consultation session for the Budget 2016.

Malaysia is a net oil exporter of LNG but is considered a net importer of crude oil and petroleum products if LNG is not included. It is also the world’s second largest palm oil producer and a leading palm oil exporter.

Najib added that uncertainty over interest rates in the US will also weigh on the ringgit’s strength and capital flows.

“Hence, economic growth, the current account balance and government revenues will be affected by these developments. We need to be vigilant at all times,” he said.

Besides these pressures on the domestic front, Najib also noted that economic uncertainty in other countries will also affect the local economy.

Some of these external factors listed by Najib include geopolitical tensions, China’s slower economic growth, spillover effects from monetary policies in advanced economies and volatile capital flows.

In the same speech, Najib also “promises” that additional government revenue from the GST will be ploughed back to enhance the economy’s growth potential, improve Malaysians’ wellbeing and create new jobs.

He also gave his assurance that Putrajaya is still committed to strengthening public finances without jeopardising economic growth, adding that Malaysia is still aiming to trim its Budget 2015 deficit to 3.2 per cent of the GDP.

Out of the 91 initiatives under Budget 2015, Najib said eight was completed, 69 were still being implemented and 14 in the planning stage are expected to start in mid June.

One of the successfully completed touchpoints is the 20 per cent discount given to borrowers of the National Higher Education Fund Corporation loans who cleared off their debts lump sum, with 49,968 benefiting from this scheme as of March 31, he said.

The theme of this year’s Budget consultation is “Strengthening Growth, Enhancing Inclusiveness, Ensuring Fiscal Sustainability”.

Budget 2016 is expected to be tabled in Parliament on October 23, 2015.

In outlining the significance of Budget 2016, Najib said it will be the first government budget under the 11^th Malaysia Plan, with the annual budgets over the next five-year period to be a “critical building block” to achieve the country’s goal of becoming a high-income nation by 2020.