KUALA LUMPUR (Feb 16): Malaysia’s much better-than-expected growth last quarter has prompted a flurry of analyst upgrades to their forecasts for this year, with some predicting the Southeast Asian nation will once again outperform official projections.
Maybank Investment Bank Bhd, MBSB Investment Bank Bhd and RHB Bank Bhd (KL:RHBBANK) expect Malaysia’s gross domestic product (GDP) growth to exceed the government’s 4% to 4.5% forecast for 2026, while CIMB Bank Bhd and Oversea Chinese Banking Corp (OCBC) raised their estimates to the upper end of the range. Kenanga Investment Bank Bhd sees “upside potential towards 5.0% if current momentum holds”.
Anchoring the improved outlook is domestic demand. Income growth indicators and policy measures such as cash handouts, along with tourism sector growth point to resilient consumption spending, said analysts Suhaimi Ilias and Azril Rosli of Maybank in a note Sunday.
| Analysts | 2026 growth forecast |
| Maybank | Raised to 5.1% from 4.5% |
| MBSB | Raised to 4.6% from 4.3% |
| CIMB | Raised to 4.5% from 4.4% |
| OCBC | Raised to 4.4% from 3.8% |
| Kenanga | Maintained at 4.5%, with upside potential toward 5% |
| RHB | Maintained at 4.7% |
Malaysia has emerged as one of Southeast Asia’s outperformers in 2025, with the economy’s strong fundamentals and the government’s reform push facilitating a surge in investment in its booming data centre sector. Alongside Singapore and Vietnam, it has also managed to defy the drag from higher US tariffs and global trade disruptions.
Higher growth helped the government beat its fiscal consolidation target for a second straight year in 2025, with the budget deficit narrowing to 3.7% of GDP compared to its 3.8% aim. The Finance Ministry on Friday vowed to uphold fiscal discipline to safeguard long-term sustainability while supporting the economy’s momentum.
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The solid performance, along with contained inflation, has analysts expecting the central bank will continue to keep the interest rate unchanged through 2026. Bank Negara Malaysia (BNM) has cut the overnight policy rate (OPR) just once in the past five years, and said on Friday that it sees growth momentum continuing this year amid moderate price pressures.
“We expect that the sub-2% inflation rates for 2026 will provide room for BNM to maintain the OPR at its current level, with hotter and sustained demand-pull inflation being the key trigger for a reassessment of this stance,” said CIMB analysts Chew Khai Yen and Michelle Chia in a note Friday.
To be sure, external volatilities remain a key risk for Malaysia this year. The trade outlook may be constrained by the impact of higher US tariffs, alongside the risk of softer external demand across major global markets, according to MBSB in a note on Friday.
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