Yeah Kim Leng of Sunway University described the budget as “prudent and responsible” given that spending had been reduced for the first time in many years.
Yesterday, the federal government allocated a total of RM419.2 billion in its 2026 budget estimates, a RM2 billion decrease from the RM421 billion allocated for 2025.
Yeah said the proposed initiatives in the budget were “more targeted”, focusing on social support and cost of living measures, including cash aid for vulnerable groups.
“The rakyat are the main beneficiaries from welfare assistance to hospital allocations,” he told FMT.
He added that the fiscal deficit, projected to narrow from 3.8% in 2025 to 3.5% next year, showed a firm commitment to discipline.
“The government appears to have struck the right balance by keeping the economy on a steady growth path of 4% to 4.5%.”
Yeah said Visit Malaysia Year 2026 could boost the domestic economy through tourism but warned that global headwinds still posed risks, including slower trade and higher US tariffs.
“We are preparing for a turbulent 2026, yet the government remains focused on fiscal prudence, reducing the deficit, and supporting the domestic growth engine that remains the key point.”
Economist Carmelo Ferlito, CEO of the Center for Market Education think tank, said the budget was less populist than in the past but remained halfway between a reformist ambition and a continued reliance on government intervention.
He welcomed the move to reduce the fiscal deficit, calling it a “responsible move” toward fiscal consolidation.
“Although any deficit distorts market coordination, a trajectory toward fiscal restraint is preferable to unchecked public spending,” he said.
He said the plan to mobilise around RM10 billion through public-private partnerships and co-investment with GLICs could, in principle, give markets a larger role, as long as the government refrained from picking winners.
“Private participation, not direction, should define investment policy,” he said.
Short of expectations
However, economist Barjoyai Bardai, provost at the Malaysia University of Science and Technology, said he had expected a larger total budget of around RM430 billion, instead of the RM419 billion announced by Prime Minister Anwar Ibrahim, who is also finance minister, yesterday.
He said a reduced budget will have an impact on economic development.
“The idea is for the government to meet its budget deficit target of 3.6%. The country is in a booming phase and the economy is trying to reach its peak by next year. We need that extra push, but unfortunately, it fell slightly short,” he said.
However, he welcomed higher agriculture incentives and efforts to improve food security as well as rural welfare with each padi farmer set to receive assistance of about RM4,300 per hectare, compared with RM3,790 per hectare for each planting season.