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KUALA LUMPUR , El Sky News— Malaysia’s economy is expected to maintain steady growth in 2026 despite ongoing global uncertainties, supported by strong domestic demand, a resilient labour market, and continued expansion in the services sector, according to the latest analysis by New Straits Times (NST) and the Ministry of Finance (MoF).
Malaysia’s gross domestic product (GDP) is projected to grow between 4.0% and 4.5% in 2026. Growth is expected to be driven primarily by robust domestic consumption, stable private spending, and a sustained recovery in the tourism sector ahead of Visit Malaysia Year 2026 (VM2026).
The services sector is forecast to remain the main engine of growth, expanding by 5.2%, supported by stronger activity in retail, tourism, and financial services. The sector’s performance reflects Malaysia’s ongoing shift toward a more consumption- and services-led economic structure.
Inflation is expected to remain contained, with consumer price growth projected in the range of 1.3% to 2.0%, aided by prudent monetary policy and government intervention measures. To help ease cost-of-living pressures, the government has increased allocations for Sumbangan Tunai Rahmah (STR) to RM15 billion, up from RM13 billion in 2025, targeting lower- and middle-income households.
Malaysia’s labour market continues to show its strongest stability in a decade. The unemployment rate is expected to remain low at 3.0%, indicating near full employment. Under the 13th Malaysia Plan (13MP), the government aims to strengthen human capital development and ensure more meaningful wage growth aligned with productivity improvements.
On the fiscal front, the government remains committed to gradual fiscal consolidation. The fiscal deficit is projected to narrow to 3.5% of GDP in 2026, compared with 3.8% in the previous year. Government revenue is expected to improve through the full rollout of e-invoicing, the expansion of the Sales and Services Tax (SST) base, and the introduction of a carbon tax.
Overall, Malaysia’s 2026 economic report card points to a stable outlook with manageable risks. However, economists caution that sustaining long-term growth will depend on the pace of structural reforms, productivity gains, and Malaysia’s ability to navigate an increasingly complex global economic environment.
