PETALING JAYA: Resilient private consumption is expected to support Malaysia’s economic growth in 2026, on the back of stable employment conditions, the second phase of the civil service salary hikes in January, and a rise in tourist arrivals from Visit Malaysia 2026.
Economists project that the economy, as measured by gross domestic product (GDP), will grow faster than the government’s more cautious forecast of 4% to 4.5%, with Nomura raising its GDP forecast to 5.2% from 4%. Nomura also expects 2025 GDP growth of 4.8%.
“We expect strong investment-led growth to persist into 2026, sustained by the implementation of more reforms and infrastructure projects, and progress in the Johor-Singapore Special Economic Zone.
“Tightening labour markets support private consumption, while the sustained tech cycle fuels a rebound in exports,” it said.
“We forecast a pickup in headline consumer price index (CPI) inflation to 2% in 2026, which is at the upper end of the official forecast range of 1.3% to 2% (consensus: 1.8%), from our estimate of 1.4% in 2025.
“Our forecast pencils in a gradual upward trajectory and is consistent with our view of robust domestic demand, with the labour market holding up and wages picking up.
“We therefore expect core inflation to rise to 2.4% in 2026, (up) from our estimate of 2% in 2025,” Nomura added.
CGS International (CGSI) Research expects GDP growth of 4.6% in 2026, slightly lower than its 2025 projection of 4.7%, with steady labour market conditions, sustained targeted subsidies, and improvements in tourism-related industries continuing to anchor domestic demand.
The research house said improving external demand from the temporary US-China trade truce could reduce supply chain disruptions, in turn supporting Malaysia’s GDP growth.
It expects private consumption to moderate to 4.8% growth in 2026, down from 5% this year, largely driven by government efforts to raise disposable income and consumption.
CGSI Research said investments in fixed assets should remain robust but moderate to 8.3% in 2026, from 9.8% in 2025, due to high-base effects.
“We expect investment growth to be supported by the construction sector, bolstered by infrastructure and utilities projects, as well as the construction of non-residential buildings, schools, and the upgrading of health facilities as outlined in Budget 2026.”
The research house added that improving business confidence should lead to loans trending higher next year, following a double-digit rise year-to-date in loan applications from construction and manufacturing sectors.
