Malaysia Equity Strategy: Budget 2027: Commitment to growth-supportive spending

Malaysia's Prime Minister and Minister of Finance Anwar Ibrahim tabled the 2027 national budget to Parliament, penciling in an estimated deficit of 3.3% of GDP (2026: 3.6%) and real GDP growth of 4.2-5.2% in 2027. The size of the budget rose 8.5% y/y, to RM510bn, reflecting the government's continued commitment to growth-supportive spending while advancing fiscal consolidation and resource redistribution through targeted social assistance. J.P. Morgan's economists project 2027 GDP growth at 4.5%y/y, with some upside risk if tech exports or data center investments surprise to the upside. Key measures: (1) cost-of-living support, with STR/SARA rising to RM16bn (from RM15bn), alongside an 18% minimum-wage increase to RM2,000 from Jun-27, creating mixed implications for Consumer; (2) energy transition, with TNB investing RM15bn in grid reinforcement and green tax incentives extended to end-2030, benefiting Utilities and solar EPCC players;