KUALA LUMPUR: Malaysia\u2019s economy is expected to remain robust, well supported by the continued strength in the electrical and electronics sector and robust domestic demand amid global headwinds.<\/p>\n
Following the Department of Statistics Malaysia\u2019s (DOSM) announcement today that the economy is projected to grow by 5.3 per cent in the first quarter of 2026 (1Q 2026) based on advance estimates, HSBC Global Investment Research said Malaysia started 2026 on a resilient footing.<\/p>\n
It maintained Malaysia\u2019s gross domestic product (GDP) growth forecast at 4.5 per cent for 2026, placing it at the mid-point of Bank Negara Malaysia\u2019s revised growth range of 4.0 to 5.0 per cent.<\/p>\n
“While the figure came in slightly below the market expectation of 5.5 per cent year-on-year (y-o-y), it exceeded our forecast of 5.1 per cent,\u201d it said.<\/p>\n
HSBC Global said two key surprises were the resilience of the manufacturing sector, which grew nearly six per cent y-o-y, driven by the ongoing boom in the electronics segment, where Malaysia is a key beneficiary in the supply chain.<\/p>\n
The second was the moderation in construction growth to single digits after eight consecutive quarters of double-digit expansion.<\/p>\n
“This may be an early sign that the sector\u2019s growth is moderating,\u201d it said.<\/p>\n
Meanwhile, HSBC Global said Bank Negara Malaysia (BNM) is the only central bank in Asia that has upgraded its growth forecast despite the West Asia conflict.<\/p>\n
“We do not expect BNM to move in either direction, expecting the central bank to keep its policy rate unchanged at 2.75 per cent,\u201d it said.\u00a0<\/p>\n
Meanwhile, RHB Investment Bank Bhd (RHB IB) maintained a constructive outlook on Malaysia\u2019s economy, projecting GDP growth at around 4.7 per cent in 2026, supported by domestic consumption, private investment and export activity.<\/p>\n
The investment bank opined that the retail and wholesale sectors should continue to benefit from a firm labour market, steady wage growth, and rising household incomes.<\/p>\n
It said manufacturing remains on a broadly positive trajectory, supported by sustained global E&E demand and a robust domestic economy, though it is sensitive to external developments and fluctuations in input costs.<\/p>\n
“Private investment is projected to stay robust, driven by infrastructure rollouts, data centre developments, and continued expansion in the manufacturing sector,\u201d it added.<\/p>\n
It said Malaysia is expected to be the least negatively affected economy among ASEAN member states under the current conflict scenario.<\/p>\n
“Nonetheless, a prolonged or intensified escalation could exert upward pressure on oil prices and weigh on Malaysia\u2019s growth outlook,\u201d it said.\u00a0<\/p>\n
RHB IB added that in a worst-case scenario, a sustained increase in oil prices to US$140 per barrel, from a pre-conflict average of US$70, could reduce GDP growth by about 0.5 percentage points to around 4.2 per cent.<\/p>\n
“Should these risks materialise, Malaysia\u2019s GDP growth in 2026 could ease to around 4.0 per cent, with external headwinds partly offset by strong domestic fundamentals, proactive policy support and its position as a net energy exporter, which may provide some cushioning,\u201d it said. – Bernama\u00a0<\/p>\n
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