By Rosemarie Khoo Mohd Sani
KUALA LUMPUR, Sept 16 (Bernama) -- Malaysia’s imperative in the Budget 2027 cycle is no longer to generate growth, but to institutionalise growth stability -- making expansion more productive, inclusive and resilient across the cycle, said Juwai IQI global chief economist Shan Saeed.
Shan said the country has considerable macroeconomic momentum, as gross domestic product (GDP) expanded 6.0 per cent year-on-year (y-o-y) in the second quarter of 2026, unemployment held at 3.0 per cent in June, and inflation stayed contained at 1.8 per cent in July.
Thus, he expected GDP for 2027 to meander between 5.3 per cent and 6.5 per cent, with solid macroeconomic stability and the growth calculus intact.
He said five priorities should anchor the fiscal architecture in Budget 2027.
“The first priority is to preserve fiscal credibility while safeguarding purchasing power.
“Targeted subsidy rationalisation should continue, with savings redeployed into healthcare, education, transport and vulnerable households,” he told Bernama.
Shan said that with household debt at 84.8 per cent of GDP at end-2025, calibrated relief carries a stronger multiplier than broad consumption stimulus.
The second priority is to deepen housing affordability, he stressed.
According to Shan, roughly seven in ten subsale residential transactions involve homes priced at RM500,000 or below, per IQI's market data.
“Extending the first-home stamp-duty exemption beyond 2027 and expanding mortgage guarantees for creditworthy gig-economy workers would support genuine buyers without fuelling speculative excess,” he said.
For the third priority, Shan said investment volume should pivot to investment value.
This is as McKinsey Global Institute finds that tangible investment -- infrastructure and machinery -- and intangible investment in research, software and intellectual property together account for up to 80 per cent of productivity growth.
He said incentives should be conditioned on skilled employment, export orientation, technology transfer and Malaysian supplier participation, with faster approvals compressing execution friction.
As for the fourth priority, he said, codify a national productivity compact.
Shan said labour productivity per hour rose 5.5 per cent y-o-y to RM46.50 in the second quarter; productivity per employee advanced 4.9 per cent to RM26,595, with manufacturing outperforming at 7.3 per cent.
“McKinsey estimates early adopters of generative artificial intelligence (AI) could see productivity growth accelerate by more than 0.5 percentage point.
“Budget 2027 should reinforce this trajectory through accelerated capital allowances for small and medium enterprise (SME) automation and AI adoption, conditioned on measurable productivity gains and wage progression,” he said.
Lastly, he said, Malaysia should build the energy architecture for the AI economy.
Shan noted the country has approved RM144.4 billion in data-centre and cloud-computing investment between 2021 and mid-2025, while data-centre electricity demand is projected to exceed five gigawatts by 2035.
Grid modernisation, renewable integration, battery storage, gas security and the institutional groundwork for civil nuclear power are now imperatives of national competitiveness, he opined.
“Budget 2027 should not merely distribute the dividends of growth; it should compound them into structural advantage -- higher productivity, stronger wages and durable competitiveness.
“Capital follows confidence. Confidence follows credibility. And credibility begins with macroeconomic resilience and growth stability,” Shan added.
-- BERNAMA