Kuala lumpur: Malaysia’s current account is anticipated to improve significantly with a projected surplus increase to 1.8 percent of GDP through 2025-2026. This marks an improvement from the previous target of 1.4 percent.

According to BERNAMA News Agency, Kenanga Investment Bank Bhd highlighted that the easing of US-China tariff tensions in the fourth quarter of 2025 has mitigated a major risk to Malaysia’s trade outlook. This development, coupled with sustained demand related to artificial intelligence, is expected to bolster Malaysia’s electrical and electronics exports, especially in the higher-value semiconductor sectors.

On the services front, the surplus is projected to expand, driven by increased investments in data centers and digital infrastructure, along with stronger tourism revenues anticipated from Visit Malaysia 2026. Upcoming promotions and incentives are likely to enhance tourist arrivals during this period.

Kenanga noted that while a stronger ringgit might pose a minor challenge, it is not expected to significantly impact the overall improvement in goods and services balances. The current account is expected to remain in surplus even as primary and secondary income deficits persist but stabilize and narrow.

The trajectory of the ringgit is also showing improvement, supported by steady foreign demand for Malaysian bonds amidst a stable macroeconomic environment and clearer fiscal consolidation. Export-earnings repatriation is further boosting momentum, with foreign exchange deposits reaching RM300 billion in September. A 10 percent drawdown from these deposits could potentially increase the ringgit’s value by about 2.7 percent.

With the US dollar expected to weaken due to slower US economic growth, rising fiscal challenges, and anticipated Federal Reserve rate cuts, Malaysia is well-positioned to benefit. Kenanga maintains its forecast for the US dollar against the ringgit at 4.08 by the end of 2025 and 3.95 by the end of 2026.