Domestic demand to spur economic growth of 5-6 pct next year

SARAWAK’S economy is projected to grow between 5 and 6 per cent in 2027, supported by domestic demand.

Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg said the forecast compared with projected growth of between 4.5 and 5 per cent in 2026, supported by sustained domestic demand and expansion across all major economic sectors.

He said the continued implementation of investment projects would remain an important driver of growth next year.

“Household spending is expected to remain supportive, while firmer external demand will provide an additional lift to exports,” he said when tabling the Supply (2027) Bill, 2026 on Monday (Oct 12).

On the demand side, he said consumption was projected to expand by 11.2 per cent in 2026, providing further support to domestic economic activity.

He said public consumption would be supported by government spending on emoluments and operational expenditure, including the continued impact of salary adjustments under Phase 2 of the Sistem Saraan Perkhidmatan Awam (SSPA).

He added that private consumption, meanwhile, was expected to remain resilient, supported by employment and income growth, alongside targeted measures to ease cost pressures and sustain household purchasing power.

Abang Johari identified Sumbangan Keperluan Asas Sarawak (SKAS), Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) among the measures supporting household spending.

“Assistance under SKAS has been increased, with an allocation of RM680 million for 2026 to further boost household income.”

Meanwhile, he said investment activity was projected to expand by 5 per cent in 2026, supported by continued public development spending and private-sector participation.

“Sarawak secured RM11.2 billion in approved investments across the services, manufacturing and primary sectors during the first half of the year.”

He described the approvals as reflecting investor confidence in the state’s economic prospects.

On public investment, Abang Johari said RM15.7 billion had been allocated for development expenditure in 2026, comprising RM9.7 billion under the Sarawak Budget and RM6 billion from federal development allocations.

He outlined the expected contribution of infrastructure projects and socio-economic programmes to economic activity and longer-term development.

“The ongoing implementation of infrastructure projects and socio-economic programmes will not only support near-term activity but also strengthen connectivity, narrow regional development gaps, and expand Sarawak’s productive capacity,” he said.

On inflation, he said Sarawak recorded an average rate of 0.7 per cent during the first seven months of 2026 despite potential external price pressures arising from developments in the Strait of Hormuz and volatility in global energy markets.

He attributed the moderate inflation rate partly to lower prices for selected items under the housing, water, electricity, gas and other fuels category, which helped offset increases in food and beverage prices.

“The BUDI MADANI targeted diesel subsidies and the Sarawak government’s 25 per cent electricity bill discount for domestic users also helped cushion households against price pressures,” he said.

For the whole of 2026, he said that inflation was projected to range between 1 and 1.5 per cent, reflecting the expected effects of developments in global energy and commodity prices.

“This moderate outlook underscores the effectiveness of our targeted measures in protecting households from external shocks while sustaining purchasing power and economic stability,” he said.

On employment, Abang Johari said labour market conditions remained favourable during the first half of 2026, with Sarawak’s labour force expanding to 1.267 million people from 1.262 million in the corresponding period last year.

“The unemployment rate remained stable at an average of 3.4 per cent, while labour demand continued to be supported by sustained activity in the services, construction and manufacturing sectors.”

Despite the projected improvement in economic growth next year, he cautioned that Sarawak’s outlook remained exposed to global uncertainties, including commodity price movements, geopolitical developments and broader external challenges.

“These risks underscore the importance of maintaining fiscal resilience, diversifying our economic base, and strengthening Sarawak’s competitiveness to safeguard long-term prosperity,” he said.