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SHAH ALAM – Budget 2027's success will depend on whether its measures improve household purchasing power and ease living costs, rather than the size of its allocation alone, economists say.
Economist Anis Anwar Suhaimi said the budget followed a familiar pattern of record spending, with an emphasis on strengthening existing programmes rather than introducing major new policies.
Despite a 3.6 per cent increase in allocation compared with the revised 2026 budget, he said the effectiveness of its measures would determine whether households experienced meaningful economic improvements.
“The real test is whether these measures improve people's purchasing power,” he told Sinar Daily.
Anis said the increase in the minimum wage from RM1,700 to RM2,000 was encouraging but cautioned that higher labour costs should not translate into significantly higher consumer prices.
He added that cash assistance could cushion the impact of rising living costs but would not permanently ease the financial pressures faced by households.
Voters, meanwhile, were likely to focus on the immediate benefits they would receive rather than the broader implications of the national budget, he said.
“At the individual level, however, voter sentiment often comes down to one simple question: ‘What do I actually get?’” he said.
Cash assistance, wage increases and other direct household benefits were likely to attract the most immediate public attention, he added.
On the political implications of Budget 2027, Anis said its impact on the Melaka state election scheduled for Nov 14 could be limited unless development commitments specific to the state were clearly communicated to voters.
Measures benefiting micro, small and medium enterprises (MSMEs), including support for petty traders, microfinancing and rental discounts for small traders, could bring economic benefits to the state.
However, the federal budget might not automatically translate into electoral gains for Pakatan Harapan (PH), particularly given Barisan Nasional's control of the outgoing state administration, he said.
“Unless Melaka-specific development commitments are clearly communicated and made politically visible, PH may struggle to translate the federal budget into meaningful electoral advantage,” he said.
In Sabah and Sarawak, Anis said Budget 2027 reflected a stronger fiscal commitment to East Malaysia, with Sabah receiving RM18.7 billion and Sarawak RM16.2 billion, an increase of RM1.1 billion for each state.
However, higher allocations alone would not necessarily resolve longstanding infrastructure gaps, development disparities and outstanding demands under the Malaysia Agreement 1963 (MA63).
Anis cautioned that greater federal spending would not necessarily translate into stronger electoral support for PH in East Malaysia, where Gabungan Rakyat Sabah (GRS) and Gabungan Parti Sarawak (GPS) have their own regional political interests.
State-based parties could present development gains as achievements secured through negotiations with Putrajaya, while public dissatisfaction over shortcomings could be directed at the federal government's implementation, he said.
“The key distinction is between public satisfaction with federal spending and political credit for delivering it,” he said.
Budget 2027 could strengthen cooperation between the federal government and state administrations without necessarily improving PH's electoral position in East Malaysia, Anis added.
While the budget might generate positive sentiment towards Prime Minister Datuk Seri Anwar Ibrahim's administration, he said it was premature to describe it as an election budget.
“Public confidence will depend more on implementation and tangible economic outcomes than on the size of the allocation itself,” he said.
Meanwhile, economist Izlin Ismail said Budget 2027 offered direct assistance to lower-income households, middle-income taxpayers and workers across different sectors.
She said allocations for Sumbangan Tunai Rahmah (STR), Sumbangan Asas Rahmah (SARA), gig workers and higher minimum wages reflected efforts to address the needs of different income groups.
The budget also included tax relief and wider tax bands for middle-income taxpayers, alongside measures targeting civil servants, the B40 and M40 groups, and gig workers.
“The measures conveyed the message that the government was seeking to ensure no group was left behind,” she said.
Izlin added that the projected narrowing of the fiscal deficit to 3.3 per cent of gross domestic product (GDP) reflected the government's commitment to fiscal management.
On East Malaysia, she said spending on rural infrastructure, education, water and electricity supply, roads, schools and healthcare services, alongside increased MA63-related grants, could strengthen federal-state relations.
