KUALA LUMPUR: Malaysia's fiscal consolidation remains on track with the budget deficit projected to narrow to 3.5 per cent of the gross domestic product (GDP) next year.
Hong Leong Bank Bhd's post-budget roundtable highlighted the government's efforts in the 2026 Budget on sustaining growth through sound governance and targeted strategies, while maintaining momentum in domestic expansion.
The bank's house view for real GDP growth of between 4.0 per cent and 4.5 per cent for next year also aligns with the government's forecast.
Hong Leong also expects inflation to remain manageable averaging around 2.0 per cent and the overnight policy rate to stay at 2.75 per cent throughout 2026.
The roundtable featured insights from Taylor's University adjunct professor Prof Ong Kian Ming, who served as Deputy Minister of International Trade and Investment from July 2018 to February 2020.
Other panellists included Small and Medium Enterprises Association of Malaysia president Datuk William Ng, PwC Malaysia tax partner Ang Wei Liang and Hong Leong Bank fixed-income and economic research economist Choong Yin Pheng.
Hong Leong expects Malaysia's economic trajectory in 2026 to remain stable, anchored by steady domestic growth and disciplined fiscal management.
"The government's continued focus on expanding the revenue base, particularly through enhancements to the Sales and Service Tax framework and reducing reliance on petroleum-related income, underscores a more sustainable fiscal position," it said.
The bank also noted positive progress in subsidy reform, which continues to rationalise expenditure while redirecting savings toward more targeted social assistance programmes.
Source: https://www.nst.com.my/business/corporate/2025/10/1299878/fiscal-reforms-subsidy-rationalisation-anchor-economic-stability