Malaysia’s Economy Expected To Grow 4.0% To 5.0% In 2026, Says BNM Governor

KUALA LUMPUR, JULY 2026 – Malaysia’s economy is expected to remain on a steady growth path in 2026, with Bank Negara Malaysia maintaining its full-year economic growth forecast at between 4.0% and 5.0%. BNM Governor Datuk Seri Abdul Rasheed Ghaffour said the country’s economy continues to show resilience despite external uncertainties, including tensions in the Middle East and a challenging global environment.

Malaysia recorded 5.4% economic growth in the first quarter of 2026. Abdul Rasheed said the latest indicators suggest that economic activity may moderate in the second quarter, but the overall pace of growth remains healthy when viewed against current global economic conditions.

The central bank remains confident that Malaysia’s economy can stay within the projected 4.0% to 5.0% range for the full year. Abdul Rasheed also did not rule out the possibility of growth moving closer to the upper end of the forecast range, describing the projected performance as solid in a challenging period.

Malaysia’s outlook is also supported by the International Monetary Fund, which maintained its 2026 growth forecast for the country at 4.7%. The IMF noted that Malaysia continues to benefit from data centre-related activities and the recovery of the global technology cycle.

The preliminary estimate for Malaysia’s second-quarter gross domestic product is scheduled to be released on July 17, while the official figures are expected to be published in August. These numbers will provide a clearer view of whether the economy is maintaining momentum after the strong first-quarter performance.

Abdul Rasheed said BNM’s confidence is supported by several factors, including easing tensions in the Middle East and stabilising global supply chains. Businesses have also adjusted their operations by diversifying supply sources, helping to reduce disruption and stabilise prices.

On the domestic front, demand remains resilient, supported by a stable labour market, strong export performance and continued investment activity. The unemployment rate is currently around 2.9% to 3.0%, reflecting near full employment conditions in Malaysia.

Although some companies have become more cautious in hiring due to global uncertainty, most businesses are still maintaining their existing workforce. Strong export growth is also expected to continue supporting the labour market and private consumption.

Malaysia’s key growth drivers are expected to remain strong, especially from artificial intelligence-related demand and the electrical and electronics sector. Investment flows also remain encouraging, driven by existing and new projects, including data centre development and the continued implementation of approved investments.

The high implementation rate of approved investments shows that planned projects are being translated into real economic activity. Abdul Rasheed said both government and private sector projects, including smaller-scale initiatives, will continue to support Malaysia’s domestic economic momentum.