Broker Name: CGS International
Date of Report: October 10, 2025
Excerpt from CGS International report.
Report Summary
- Malaysia’s Budget 2026 continues to focus on fine-tuning existing MADANI policies instead of major reforms, with a prudent approach amid lower oil revenues and a weak GDP outlook. The budget includes surprise mass cash handouts, incentives for civil servants, and targeted support for high-value sectors.
- The government is relying more on private sector investments for development, with modest increases in development expenditure and a push for Government Linked Companies involvement. Fiscal deficit is projected to decline to 3.5% of GDP in 2026, but government debt and debt service charges remain elevated, nearing statutory limits.
- Budget 2026 may be an election-oriented budget, given its populist measures and lack of controversial reforms. Major allocations target strategic infrastructure, AI and digitalisation, social inclusion, agriculture, tourism, and empowerment initiatives for women, youth, and vulnerable groups.
- Federal revenue growth in 2026 is softer due to declining petroleum-related income, with tax revenue taking a larger share of the revenue base. Subsidy costs are projected to decrease for the third consecutive year due to rationalisation and lower fuel prices.
- Economic outlook remains cautious, with real GDP growth forecast at 4.1% for 2026, supported by domestic demand and private sector investment, while external sector performance faces challenges.
Above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website: https://www.cgs-cimb.com/en/home
