KUALA LUMPUR, Dec 5 (Bernama) -- Bursa Malaysia closed lower on Friday amid mixed regional market performance as investors turned cautious over a possible rate hike by the Bank of Japan (BOJ) and upcoming US economic data that may influence the Federal Reserve’s (Fed) interest rate decision next week. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) pared most earlier losses to settle 4.55 points easier, or 0.28 per cent, to 1,616.52 from Thursday’s close of 1,621.07. The benchmark index, which opened 0.37 of-a-point lower at 1,620.70, moved between 1,609.67 and 1,621.25 throughout the day. The broader market was negative, with decliners outpacing advancers 604 to 439. A total of 550 counters were unchanged, 1,151 untraded, and 18 suspended. Turnover declined to 3.17 billion units worth RM2.24 billion from 4.48 billion units worth RM2.75 billion yesterday. Rakuten Trade Sdn Bhd vice-presiden...
Malaysia is expected to maintain its fiscal consolidation drive in Budget 2026, even as the economy faces moderating growth, according to a preview by CIMB Treasury and Markets Research.
Growth Outlook
CIMB projects GDP growth of 4.1% in 2026, down from its earlier 4.5% forecast, citing weaker external demand, softer consumption, and subdued investment sentiment in a post-Trump trade environment.
Despite the slowdown, the government is expected to narrow the fiscal deficit to –3.6% of GDP from –3.8% in 2025, consistent with its long-term fiscal targets.
Revenue and Expenditure Trends
Revenue: Expected to rise 4% YoY to RM353.3 billion, supported by:
Expanded sales and service tax (SST)
E-invoicing rollout and tighter compliance
Higher “sin taxes”
Preparations for a gradual carbon tax from 2027, starting with the iron and steel sector
Operating expenditure: Forecast to increase 3.9% to RM348.1 billion, partly due to Phase 2 of the civil service salary adjustment in Jan 2026 (+RM8 billion to wage bill).
Subsidy rationalisation: Savings from the new RON95 fuel subsidy mechanism and electricity tariff reforms will be redirected to cash transfers and social aid.
Cash aid: Sumbangan Tunai Rahmah (STR) and SARA credits projected at RM17 billion in 2026 (2025: RM15 billion).
Development Spending and Policy Priorities
Development expenditure is expected at RM87 billion, slightly above 2025, as the 13th Malaysia Plan (13MP) begins. Key priorities include:
Infrastructure and transport (e.g., LRT Mutiara Penang)
Johor–Singapore Special Economic Zone
Major flood mitigation projects
Green transition and digitalisation initiatives
Other focus areas include affordable housing (rent-to-own and build-then-sell models), tourism promotion ahead of Visit Malaysia Year 2026, and continued industrial upgrading under the NIMP, NETR, and NSS masterplans.
Petronas and Oil-Linked Revenues
Petronas dividends are projected at RM30 billion in 2026, down from RM32 billion in 2025, as crude oil prices are expected to average USD65–70 per barrel. The decline highlights the importance of tax reforms and subsidy rationalisation in offsetting lower oil revenues.
Policy Outlook
CIMB noted Malaysia typically widens its fiscal deficit only during crises, such as the global financial crisis and the Covid-19 pandemic. Absent such shocks, the government is likely to stay the course on fiscal discipline while relying on monetary policy for support.
“With growth moderating, the heavier lifting will fall on Bank Negara Malaysia,” CIMB said, adding that an OPR cut could come as early as 1Q26 if downside risks materialise.
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