Malaysia’s stronger-than-expected economic expansion in the final quarter of last year has led several research houses and banks to revise their growth projections upward, with some now expecting the country to exceed the government’s official 4% to 4.5% GDP target for 2026, Bloomberg reports.
Maybank Investment Bank Bhd, MBSB Investment Bank Bhd and RHB Bank Bhd expect growth to surpass the official range, while CIMB Bank Bhd and Oversea-Chinese Banking Corp have raised forecasts to the upper end of the government’s guidance. Kenanga Investment Bank Bhd maintained its projection but sees potential for expansion to approach 5% if current momentum is sustained.
Among the revised forecasts, Maybank lifted its 2026 projection to 5.1% from 4.5%, MBSB raised its estimate to 4.6% from 4.3%, CIMB increased its outlook to 4.5% from 4.4%, while OCBC raised its view to 4.4% from 3.8%. RHB maintained a 4.7% forecast, and Kenanga kept its 4.5% baseline with upside potential.
Analysts attribute the improved outlook largely to domestic demand, supported by rising incomes, policy measures including cash assistance and continued growth in tourism, which have helped sustain consumption.
Malaysia was among Southeast Asia’s stronger performers in 2025, supported by firm economic fundamentals, reform measures and rising investment, particularly in the expanding data centre sector. The country, alongside regional peers, has also shown resilience despite higher US tariffs and global trade disruptions.
Stronger growth also aided fiscal consolidation. The government narrowed the budget deficit to 3.7% of GDP in 2025, beating its 3.8% target for a second consecutive year. The Ministry of Finance has pledged to maintain fiscal discipline while supporting economic momentum.
The steady performance and contained inflation have reinforced expectations that Bank Negara Malaysia will keep the overnight policy rate unchanged through 2026.
“We expect that the sub-2% inflation rates for 2026 will provide room for BNM to maintain the OPR at its current level, with hotter and sustained demand-pull inflation being the key trigger for a reassessment of this stance,” said CIMB analysts Chew Khai Yen and Michelle Chia in a note Friday.
Despite the upbeat outlook, analysts caution that external uncertainties remain a key risk, particularly the impact of higher US tariffs and the possibility of softer global demand, which could weigh on trade performance.
Bloomberg
