Malaysia’s current account surplus widened sharply to RM15.2 billion in the first quarter of 2026, equivalent to 3.0% of gross domestic product (GDP), supported by a stronger goods surplus and robust financial account inflows amid resilient external demand and sustained foreign investor interest.
According to a research note by Kenanga Investment Bank, the current account surplus rose significantly from RM2.7 billion or 0.5% of GDP recorded in the fourth quarter of 2025.
The improvement was primarily driven by a wider goods surplus, which expanded to RM33.6 billion from RM24.3 billion previously, as imports contracted faster than exports during the quarter.
Exports declined 5.3% quarter-on-quarter, while imports fell a steeper 9.0%, despite a firmer ringgit averaging RM3.97 against the US dollar compared with RM4.15 in the preceding quarter.
The services account surplus also widened to a record RM6.4 billion from RM5.3 billion, underpinned by stronger travel receipts and higher charges for the use of intellectual property.
Travel receipts rose to RM17.4 billion from RM16.9 billion previously, boosted by festive-season tourism spending, while intellectual property-related receipts increased to RM2.9 billion from RM2.5 billion.
However, the secondary income deficit widened moderately to RM4.0 billion due mainly to lower inward remittances, while the primary income deficit narrowed to RM20.9 billion from RM23.1 billion following a sharp decline in profit repatriation by foreign firms.
Kenanga noted that Malaysia’s financial account registered significant inflows of RM27.4 billion during the quarter, the highest level in seven quarters, compared with RM9.4 billion in the previous quarter.
Portfolio investments returned to a net inflow position of RM9.1 billion from a RM1.9 billion outflow previously, supported by stronger foreign demand for Malaysian equities and continued appetite for domestic bonds.
Foreign demand for local equities stood at RM3.2 billion, while bond inflows amounted to RM4.7 billion.
Direct investment inflows moderated to RM14.7 billion from RM22.5 billion as foreign direct investment eased slightly, while other investment returned to surplus on lower overseas deposit placements by resident investors.
Looking ahead, Kenanga expects Malaysia’s external position to remain resilient despite heightened geopolitical uncertainty and the ongoing US-Iran conflict.
The research house forecast the country’s current account balance to widen further to 2.1% of GDP in 2026 from 1.6% in 2025, supported by continued strength in the electrical and electronics sector, particularly AI-related segments such as semiconductors, servers and data-centre infrastructure.
It also expects stronger services exports driven by tourism recovery and digital infrastructure investments.
Kenanga maintained its year-end forecast for the ringgit at RM3.95 against the US dollar, compared with RM4.06 at end-2025, citing resilient domestic fundamentals, sustained foreign participation in local bond markets and Malaysia’s persistent current account surplus.
On monetary policy, the research house expects Bank Negara Malaysia to keep the Overnight Policy Rate unchanged at 2.75% throughout 2026 as domestic demand remains resilient and inflation pressures manageable despite geopolitical risks.
