Kuala lumpur: Bank Negara Malaysia (BNM) is anticipated to maintain the overnight policy rate (OPR) at 2.75 percent throughout 2026, with the gross domestic product (GDP) expected to grow by 4.3 percent, according to Small and Medium Enterprise Development Bank Malaysia Bhd (SME Bank).
According to BERNAMA News Agency, the latest report, Malaysia's Economic Outlook 2026, suggests that a stable monetary environment would support the country's economic expansion this year. The bank's relief president and chief executive officer, Samad Majid Zain, stated that Malaysia's growth outlook for 2026 remains resilient, bolstered by the strength of micro, small, and medium enterprises (MSMEs) in sustaining domestic demand, employment, and productivity.
"The National Budget 2026 reinforces this momentum with RM50 billion in financing and guarantee facilities, with SME Bank entrusted to implement nearly RM2 billion in strategic national initiatives to support MSMEs scaling, technology adoption, and productivity enhancement across priority sectors," he said.
The report also anticipates domestic growth momentum to remain resilient, supported by sustained MSME activities and continued policy support, which are expected to help cushion the economy against external headwinds from rising protectionism and ongoing geopolitical tensions.
Overall, the growth outlook aligns broadly with projections by the Ministry of Finance Malaysia (MoF), the International Monetary Fund (IMF), and the World Bank, the bank mentioned. Among other observations, the report highlighted that the services sector is likely to cushion overall growth, manufacturing may face higher tariff exposure, construction activity is set to normalize, and the mining sector is expected to remain subdued.
The services sector would be supported by resilient household consumption, underpinned by accommodative monetary and fiscal policies, including higher allocations for Sumbangan Asas Rahmah, Sumbangan Tunai Rahmah, and Phase 2 civil servant salary adjustments. This would help ease cost pressures and sustain consumption, it noted.
Meanwhile, the manufacturing sector may face higher tariff exposure, as 67.1 percent of the Industrial Production Index is export-oriented, increasing vulnerability to external demand shocks and trade policy developments. "Hence, we project inflation to rise moderately to 1.7 percent in 2026, remaining at a manageable level," said head of economic research Mazlina Abdul Rahman.
For the first 11 months of 2025 (11M2025), headline inflation averaged 1.4 percent year-on-year, lower than 1.9 percent in 11M2024. "Looking ahead, lower Brent crude oil prices, expectations of a stronger ringgit compared to the 2025 average, and the absence of further fuel subsidy rationalization this year should help keep inflation in check," added Mazlina.