Malaysia to Roll Out 2026 Budget Targeting Fiscal Discipline and Growth

Malaysian Prime Minister Anwar Ibrahim, who also serves as finance minister, will unveil the 2026 budget on Friday, aiming to refine policies and align fiscal priorities with the five-year Madani economic plan introduced in July. The budget is expected to focus on social protections and strategic investments in semiconductors, green energy, and AI-driven industries. GDP growth for next year is likely projected at 4.5%–5%, following 4.0%–4.8% in 2025. Meanwhile, analysts forecast the fiscal deficit narrowing to 3.4%–3.6% of GDP from 3.8% this year, aided by reforms such as the expanded Sales and Services Tax and fuel subsidy rationalization. While broad-based tax hikes are unlikely, Anwar may raise excise duties on alcohol and tobacco and outline a carbon pricing plan for large emitters. Additional measures may include incentives for private investment, digital healthcare, and affordable housing, alongside efforts to rejoin the FTSE World Government Bond Index.