Kuala lumpur: Malaysia is expected to maintain its economic momentum in the second half of 2026, driven primarily by continued strength in the technology sector as electrical and electronics (EandE) exports remain supported by the global artificial intelligence (AI) investment cycle despite recent corrections in technology stocks.
According to BERNAMA News Agency, CGS International Securities Malaysia Sdn Bhd's economics and research head, Ahmad Nazmi Idrus, highlighted that Malaysia's EandE exports typically lag developments in the global technology sector by several months. This suggests that the current strong export performance reflects the robust global technology cycle earlier this year. During the Invest Shariah 2026 conference, Ahmad Nazmi remarked that although technology stocks have recently faced some corrections, the broader technology sector remains fundamentally robust.
The conference, themed 'Ethical Investing in a Digital and Volatile World', was co-hosted by Bursa Malaysia and CGS International Securities Malaysia. Ahmad Nazmi also indicated that Malaysia's technology sector is expected to continue performing well in the second half of 2026, barring a significant correction in global technology markets, which he views as unlikely.
Further, Ahmad Nazmi opined that the ongoing global investments in AI infrastructure are expected to sustain demand for Malaysia's semiconductor and electronics products, providing additional support to exports over the coming months.
In addition to merchandise exports, Malaysia has also witnessed a notable turnaround in services exports. Ahmad Nazmi noted that the services balance under the current account has posted surpluses for several consecutive quarters after being in deficit for the past 15 years. This improvement has been primarily driven by stronger travel and transportation receipts, reflecting a steady recovery in tourism and cross-border economic activities.
On the investment front, Ahmad Nazmi suggested that Malaysia should focus on ensuring that strong investment inflows, particularly in data centres, generate broader economic benefits beyond the construction phase. He emphasized the importance of attracting AI-related regional headquarters and research centres while encouraging greater participation by local suppliers in the data centre value chain to maximize spillover effects.
Looking ahead, Ahmad Nazmi anticipates greater clarity on Malaysia's investment landscape with the government's planned announcement of a new industrial roadmap later this year. He believes the roadmap will offer clearer direction on priority sectors and investment incentives, supporting investment momentum over the coming years.
Regarding domestic demand, Ahmad Nazmi described private consumption as resilient, although it has moderated from pre-pandemic levels. He noted that wage increases have yet to fully catch up with rising living costs and education expenses, prompting households to be more cautious in their discretionary spending.
In this context, Ahmad Nazmi expects Bank Negara Malaysia (BNM) to maintain the Overnight Policy Rate (OPR) unchanged for the remainder of the year. He stated that the current pace of economic growth does not justify tighter monetary policy as inflationary pressures remain manageable.
Finally, Ahmad Nazmi touched on the outlook for the ringgit, predicting that its performance will largely depend on the interest rate differential between Malaysia and the United States. He expects the ringgit to trade around RM3.95 against the US dollar by year-end, with some volatility due to external developments and domestic political uncertainty.