Kuala lumpur: Bank Negara Malaysia (BNM) has projected that Malaysia will maintain its economic growth momentum into the first quarter of 2026, supported by robust domestic demand and a strong export sector. The central bank highlighted that while external factors, such as the conflict in West Asia, present uncertainties, Malaysia's economic fundamentals are expected to sustain resilience.
According to BERNAMA News Agency, BNM emphasized that the potential impact of the West Asia conflict could influence domestic growth and inflation prospects. Despite these risks, the central bank noted that Malaysia's economic stability would be bolstered by employment and wage growth, as well as supportive policy measures fostering household spending.
Investment activities are anticipated to gain traction due to ongoing multi-year projects in both private and public sectors, the launch of new smaller-scale public initiatives, and the high realization of approved investments. The implementation of national master plans is also expected to stimulate economic activity.
The external sector is projected to benefit from continued strength in electrical and electronics (EandE) exports, with tourist spending also contributing positively, though at a moderated rate. The growth outlook faces potential downside risks, such as prolonged conflict in West Asia and reduced commodity output. Conversely, easing of the conflict, increased EandE demand, and heightened tourism could enhance growth prospects.
In 2025, Malaysia's economy recorded a robust performance, with a 5.2 percent GDP growth for the year, accelerating to 6.3 percent in the final quarter. BNM previously forecasted a growth range of 4 to 5 percent for 2026, underscoring domestic resilience and a diverse export structure as buffers against global headwinds.
Inflation rates for the first quarter of 2026 averaged 1.6 percent for headline inflation and 2.1 percent for core inflation. The central bank anticipates that global commodity price increases, sparked by the West Asia conflict, may heighten domestic cost pressures, pushing inflation higher. However, the impact on inflation is expected to be moderated through policy measures and stable demand, limiting the pass-through of external cost pressures.
The BNM Monetary Policy Committee remains vigilant regarding uncertainties from the West Asia conflict, with future economic impacts contingent on the conflict's progression. The official announcement of Malaysia's 1Q 2026 GDP performance is scheduled for May 15, 2026.