Malaysia’s Economy Stays Resilient Amid Global Cost Pressures

KUALA LUMPUR, JULY 2026 – Malaysia’s economic fundamentals remain strong despite mounting global cost pressures driven by prolonged geopolitical tensions, according to the Association of Chartered Certified Accountants.

The ACCA said the second-quarter 2026 Global Economic Conditions Survey, conducted jointly with the Institute of Management Accountants, showed that businesses worldwide continued to struggle with higher operating expenses. Malaysia, however, managed to navigate the uncertain external environment relatively well.

Higher logistics, fuel and raw-material costs continued to affect Malaysian companies, particularly small and medium-sized enterprises and industries that depend heavily on imported products and components.

Despite those challenges, Malaysia’s inflation rate moderated to 1.9% in June 2026. The economy also expanded by 5.8% in the second quarter, supported by resilient domestic demand and stronger activity across the manufacturing, mining and services sectors.

The government continued to ease external cost pressures by allocating RM54.7 billion in subsidies, financial assistance and incentives throughout the year. These measures were intended to stabilise prices and reduce the financial burden on Malaysian households.

ACCA Southeast Asia Maritime Portfolio Head Andrew Lim said Malaysia’s economic outlook continued to benefit from controlled inflation, stable domestic demand and targeted policy measures.

However, he warned that businesses must remain agile and carefully manage their expenses, as volatility in global markets is likely to continue.

Companies may need to improve operational efficiency, strengthen their supply chains and adopt more disciplined cost-management strategies to protect profitability during prolonged periods of uncertainty.

At the global level, continued conflict in West Asia has affected economic conditions by pushing up commodity prices and disrupting international supply chains.

More than three-quarters of accountants worldwide reported higher operating costs during the second quarter of 2026. Among chief financial officers surveyed, 83% said their organisations were facing increased expenses, approaching the record levels reported in 2022 and 2023.

Although cost pressures intensified, global confidence recovered from its previous low and moved close to a record level during the quarter. This reflected cautious optimism about economic resilience and the possibility of diplomatic progress when the survey was conducted.

Nevertheless, weaker new orders, lower capital expenditure and softer employment indicators suggested that global economic growth was slowing amid persistent inflation, geopolitical uncertainty and tighter financial conditions.

The survey identified economic pressure as the leading business risk in the second quarter, cited by 22% of accountants. Geopolitical instability ranked second at 20%, followed by cybersecurity risks at 14%.

The findings indicate that businesses are increasingly concerned about both financial pressures and external disruptions that could affect operations, investment decisions and long-term planning.

ACCA Chief Economist Jonathan Ashworth said the sharp increase in operating costs remained one of the most significant challenges facing companies during the quarter.

He warned that the risk of further monetary-policy tightening could increase should businesses continue passing higher expenses on to consumers through price increases.

Despite improving confidence, accountants remained cautious as uncertainty continued to shape the international operating environment.

The survey was conducted from June 3 to June 17, 2026, and received 647 responses. These included feedback from 453 ACCA members and 194 IMA members.

The study was completed before tensions in West Asia intensified again toward the end of June, meaning subsequent geopolitical developments could create additional risks for global businesses and economies.