Malaysia’s economy kicked off 2026 with a strong performance in the external sector and a notable appreciation of the local currency, according to the latest Monthly Highlights report from Bank Negara Malaysia (BNM).
The ringgit emerged as a standout performer in January, gaining 2.9% against the US dollar. This outpaced the regional average appreciation of just 0.3%, supported by positive sentiment toward Malaysia’s economic fundamentals and significant foreign portfolio inflows.
Malaysia’s trade sector showed remarkable resilience as export growth accelerated to 19.6%, up from 10.2% in December. This surge was primarily fueled by the Electrical and Electronics (E&E) sector, which continues to benefit from the global technology upcycle.
Malaysia’s Exports surged to RM146.9 billion (+19.6%) while Imports: RM125.5 billion (+5.3%, moderated from 9.5% in December)
The country recorded a Trade Surplus at a healthy level of RM21.4 billion, slightly narrowing from December’s RM22.1 billion due to elevated import levels.
BNM also noted that headline inflation remained unchanged at 1.6%, while core inflation held steady at 2.3%. Despite stability in the overall index, specific categories saw shifts:
Upward Pressure: were on prices for jewelry and watches (linked to precious metal costs) and a slower decline in electricity prices.
And Downward Pressure on petrol (RON97) and core services like home maintenance and streaming platforms.
The private non-financial sector saw credit growth of 5.5%, driven by an uptick in corporate bonds (7.6%). Household loan growth remained stable at 5.6%, reflecting steady demand for housing and consumer financing.
As for the banking system, Capital Strength remains robust the system-wide capital ratio is at 18.1%, with excess capital buffers totaling RM139.6 billion.
Asset Quality: Gross impaired loans stayed low at 1.4%, while the loan loss coverage ratio remained sufficient at 125.9%.
Domestic equity markets tracked the positive macroeconomic sentiment, with the FBM KLCI rising 3.6% in January. While this was below the regional average of 7.1%, the index was supported by sustained interest from non-resident investors.
In the bond market, the 10-year MGS yield remained stable, increasing by only 1 basis point despite higher issuance.
