KUALA LUMPUR – Malaysia has upgraded its economic growth projection for 2026 to 4-5 percent, banking on robust domestic demand and investments to offset risks from the intensifying Middle East conflict, Bank Negara Malaysia announced in its annual review on March 31.
This marks an increase from the government’s prior estimate of 4-4.5 percent. Governor Abdul Rasheed Ghaffour highlighted the nation’s “domestic resilience and diversified export structure” as key buffers against global headwinds, including the war’s potential to spike commodity prices and unsettle financial markets.
Malaysia defied expectations in 2025, posting 5.2 percent GDP growth despite U.S. tariffs, drawing record foreign investments and cementing its status as Asia’s resilient standout. The central bank anticipates continued strength from tech exports, tourism recovery, and its role as a net energy exporter.
Inflation is forecasted at a manageable 1.5-2.5 percent for 2026, up slightly from government projections, following last year’s five-year low of 1.4 percent. While prolonged conflict could stoke energy costs, BNM pledges vigilance to balance low inflation with economic support.
Strong household spending, fueled by job gains, wage hikes, and subsidies like the steady RM1.99 per liter price for popular petrol (despite quota cuts), will drive domestic momentum. The ringgit, Asia’s top performer over the past year, underscores this stability amid war-induced volatility since late February.
Governor Rasheed affirmed the Monetary Policy Committee’s readiness to monitor risks and ensure market order, positioning Malaysia’s economy on solid ground despite uncertain global dynamics.