Budget 2027 Likely To Focus On Boosting Consumption, Broad-based Growth - Economist
KUALA LUMPUR, Sept 24 (Bernama) -- The upcoming Budget 2027 is likely to prioritise measures to boost private consumption and cushion the economy from external shocks amid underwhelming domestic demand in the first half of this year, said an economist.
AmBank Group chief economist Firdaos Rosli said Malaysia’s economy remains on a solid footing from a macro perspective, with headline growth and inflation remaining stable.
"The idea for Budget 2027 is probably to make it more broad-based, so that people will be able to feel and benefit from the fruits of a growing economy," he said during the AmBank BizDIALOGUE Market Outlook Series: Navigating the Headwinds: What Malaysia’s Economic Reality Means for Budget 2027 today.
Firdaos said some areas of the economy need closer attention, pointing to lower-than-expected private consumption in the first half of the year despite a stable economic environment.
Firdaos said private consumption "did not go much higher than how we imagined it to be", with growth below the five per cent level, reflecting softer labour market conditions, rising production costs and ongoing global supply chain reconfiguration.
On the estimated fiscal deficit target for Budget 2027 of 3.3 per cent, he described the target as realistic, although it depends largely on nominal gross domestic product (GDP) growth and crude oil price movements.
Firdaos said the key factor underpinning the target for this year is nominal GDP, which is expected to come in at around seven per cent, providing a supportive base for fiscal consolidation.
"If the government were to spend significantly more this year compared to last year, it could realistically achieve 3.5 per cent growth this year," he said, adding that the outcome could range between 3.5 per cent and 3.7 per cent depending on crude oil prices.
Analysts are projecting Malaysia's fiscal deficit to narrow to between 3.3 per cent and 3.4 per cent of GDP in 2027, down from an estimated 3.5 per cent to 3.7 per cent in 2026.
Prime Minister Datuk Seri Anwar Ibrahim is scheduled to table Budget 2027 on Oct 9 as part of the 13th Malaysia Plan (13MP) framework targeting a three per cent deficit by 2028-2030.
-- BERNAMA