MALAYSIA is expected to face a more challenging economic landscape in 2026 due to ongoing global uncertainties that continue to pressure trade and growth, according to the country’s Treasury Chief.
Datuk Johan Mahmood Merican highlighted that key challenges include United States trade policies and tariffs, which continue to impact Malaysia’s exort-oriented economy.
“Looking ahead to next year, we anticipate more challenging conditions with projected moderate economic growth between 4.0 and 4.5 per cent.
“We remain confident of achieving at least four per cent, and there are no recession or crisis concerns, although growth is expected to be slower compared to this year,” he said during the forum “Towards Shared Prosperity: Equity in Malaysia’s Economic Trajectory” organised by Deloitte Malaysia today.
He added that Malaysia will continue fiscal consolidation to reduce the national deficit to three per cent by 2028 without compromising economic growth.
The fiscal deficit has been gradually reduced from 5.5 per cent in 2022 to five per cent in 2023, 4.1 per cent in 2024, and is projected at 3.8 per cent this year.
“This reduction is being carried out gradually to avoid sudden cuts in government spending that could undermine growth,” Johan said.
He noted that fiscal discipline and credible reforms have boosted investor confidence, contributing to the strengthening of the ringgit this year.
“Commitment to reforms, including targeted subsidies for electricity, diesel and RON95, has been well received by investors.
“The ringgit has also appreciated approximately seven per cent to around 4.14 against the US dollar,” he added. - November 13, 2025
