Malaysia is projected to miss its 2025 fiscal deficit target of 3.8% of GDP, with BMI (a Fitch Solutions company) forecasting a shortfall of 4%, due to higher spending and lower-than-expected revenue.
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BMI Warns Malaysia’s Deficit May Hit 4% Despite Official Target
The deficit setback could hinder Malaysia’s aim to reduce its budget gap to 3% by 2028. Revenue is expected to drop to 16.4% of GDP as economic growth moderates to 4.2%, below the official 4.5%–5.5% range.
Lower petroleum earnings and rising subsidy pressures—especially after a recent 14% hike in electricity tariffs—are adding to fiscal strain. Subsidy reform, particularly on RON95 petrol, remains unclear.
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