Malaysia: Malaysia's economy remains resilient despite mounting risks from the ongoing West Asia conflict, supported by strong domestic demand, sustained investment activity, and robust exports linked to the global technology and artificial intelligence (AI) upcycle. Bank Negara Malaysia (BNM) Governor Datuk Seri Abdul Rasheed Ghaffour said Malaysia's growth momentum remains intact, underpinned by private consumption, ongoing multi-year investment projects, and continued implementation of government development initiatives.
According to BERNAMA News Agency, Abdul Rasheed emphasized that growth momentum is being driven by domestic demand and strong exports, with investment and consumption holding up. This support is expected to drive Malaysia's growth for the remainder of the year. He remarked that employment conditions remain stable, with unemployment at 2.9 percent in February, and highlighted the ongoing growth of wages and government policy support to sustain consumption.
Abdul Rasheed noted that targeted support and subsidies are expected to cushion household spending amid rising global uncertainties. He pointed out that strong global demand for AI- and digitalisation-related investments has bolstered Malaysia's growth in the first quarter of 2026, with this momentum likely to continue into the latter half of the year. Projects approved by the Malaysian Investment Development Authority (MIDA) are seeing high realisation rates, and government spending under Budget 2026 and the 13th Malaysia Plan is anticipated to support economic activity further.
The financial sector in Malaysia remains strong, ensuring continued financing for the economy despite current stress. Regarding the gross domestic product (GDP) forecast of 4.0 to 5.0 percent for 2026, Abdul Rasheed stated that BNM has accounted for the impact of the West Asia conflict, including higher energy prices, supply chain disruptions, and uncertain global growth momentum. He noted that international projections align with BNM's range, with forecasts from the World Bank, ASEAN+3 Macroeconomic Research Office (AMRO), and the International Monetary Fund (IMF) all remaining within BNM's expected range.
Abdul Rasheed also mentioned that the Overnight Policy Rate (OPR) of 2.75 percent is appropriate, aligning with the Monetary Policy Committee's latest growth and inflation outlook. While acknowledging that the West Asia conflict has led to rising price pressures, with Malaysia's inflation rate increasing to 1.6 percent in the first quarter of 2026, he stated that the pass-through of higher global costs into domestic prices remains controlled due to subsidies, price controls, and enforcement measures against profiteering.
He assured that BNM would continue to monitor developments in West Asia closely and conduct ongoing assessments of their implications for Malaysia's growth and inflation outlook. The country has undertaken reforms to strengthen its resilience and ability to absorb external shocks, with policymakers set to prudently utilise available fiscal and monetary policy buffers.
Abdul Rasheed, a member of the National Economic Action Council, emphasized that the government's initial priority amid the West Asia conflict is to ensure sufficient domestic fuel supply and maintain adequate stockpiles. Authorities are closely monitoring supply levels, assessing existing reserves, and securing alternative sources should disruptions occur in current supplier countries. He further noted that Malaysia benefits from the global network and capabilities of Petroliam Nasional Bhd (Petronas), which can source crude oil and feedstock from various markets if necessary.