Kuala lumpur: Malaysia's economy is projected to experience another year of growth exceeding 5.0 per cent, driven by strong exports and steady domestic spending, as highlighted by MBSB Investment Bank Bhd.

According to BERNAMA News Agency, MBSB Investment Bank anticipates domestic consumption to remain robust, buoyed by a stable labor market, increasing incomes, and government policy measures. These measures include cash transfers and targeted subsidies that have helped mitigate price pressures from global energy costs. Additionally, an increase in tourist arrivals is expected to further bolster the consumption outlook.

The bank has put its 2026 GDP growth forecast of 4.5 per cent under review following a stronger-than-expected GDP growth performance in the second quarter of 2026, which saw an acceleration to 5.8 per cent year-on-year. Despite this optimistic outlook, MBSB Investment Bank remains cautious about potential downside risks to growth, primarily from external factors. These risks include renewed supply chain disruptions and potential weakening of final demand due to higher inflationary pressures.

Furthermore, the bank noted that tighter trade regulations might dampen external demand, especially from the United States. Similarly, Kenanga Investment Bank Bhd shares the optimistic view, expecting Malaysia's economy to expand beyond 5.0 per cent this year, surpassing its current forecast range of 4.5-5.0 per cent.

Kenanga Investment Bank highlighted that the manufacturing sector remains a positive contributor to Malaysia's GDP growth, with the Purchasing Managers' Index reading staying above the 50-point expansion threshold. However, the bank also noted concerns over weaker business confidence and a slight decline in employment, suggesting cautiousness among manufacturers due to ongoing geopolitical uncertainties.