Kuala lumpur: Malaysia's focus for the Budget 2027 cycle is shifting from generating growth to institutionalising growth stability, according to Juwai IQI global chief economist Shan Saeed. The aim is to make economic expansion more productive, inclusive, and resilient.

According to BERNAMA News Agency, Shan highlighted Malaysia's strong macroeconomic momentum, with a 6.0 per cent year-on-year GDP growth in the second quarter of 2026, steady unemployment at 3.0 per cent in June, and controlled inflation at 1.8 per cent in July. He forecasts GDP growth for 2027 to range between 5.3 per cent and 6.5 per cent, maintaining solid macroeconomic stability.

Shan outlined five priorities that should guide the fiscal approach in Budget 2027. The first priority is to maintain fiscal credibility while protecting purchasing power. He advocates for continued targeted subsidy rationalisation, with savings redirected towards healthcare, education, transport, and support for vulnerable households. Shan noted that with household debt at 84.8 per cent of GDP at the end of 2025, targeted relief is more impactful than broad consumption stimulus.

The second priority focuses on enhancing housing affordability. Shan pointed out that about seven in ten subsale residential transactions involve homes priced at RM500,000 or below. He recommends extending the first-home stamp-duty exemption beyond 2027 and expanding mortgage guarantees for creditworthy gig-economy workers to support genuine buyers without encouraging speculative activities.

For the third priority, Shan emphasised the need to shift from investment volume to investment value. Citing McKinsey Global Institute's findings, he noted that tangible and intangible investments account for up to 80 per cent of productivity growth. He suggests that incentives should be aligned with skilled employment, export orientation, technology transfer, and Malaysian supplier participation, with expedited approvals to reduce execution delays.

The fourth priority involves establishing a national productivity compact. Shan reported a 5.5 per cent year-on-year increase in labour productivity per hour and a 4.9 per cent rise in productivity per employee in the second quarter, with manufacturing leading at 7.3 per cent. He suggested reinforcing this trend in Budget 2027 through accelerated capital allowances for SME automation and AI adoption, linked to measurable productivity gains and wage progression.

Lastly, Shan discussed the importance of developing the energy infrastructure for the AI economy. Malaysia has approved significant investments in data-centre and cloud-computing between 2021 and mid-2025, with electricity demand from data centres expected to exceed five gigawatts by 2035. He stressed the need for grid modernisation, renewable integration, battery storage, gas security, and laying the groundwork for civil nuclear power to enhance national competitiveness.

Shan concluded that Budget 2027 should not only distribute growth dividends but also transform them into structural advantages, such as higher productivity, stronger wages, and sustainable competitiveness. He remarked, "Capital follows confidence. Confidence follows credibility. And credibility begins with macroeconomic resilience and growth stability."