KUALA LUMPUR: Bank Negara Malaysia (BNM) is expected to keep the overnight policy rate (OPR) at 2.75 per cent throughout 2026, while gross domestic product (GDP) is projected to grow by 4.3 per cent, said Small and Medium Enterprise Development Bank Malaysia Bhd (SME Bank).
According to its latest report, Malaysia’s Economic Outlook 2026, a stable monetary environment would support the country’s economic expansion this year.
The bank’s relief president and chief executive officer, Samad Majid Zain said Malaysia’s growth outlook for 2026 remains resilient, driven by the strength of micro, small and medium enterprises (MSMEs) in sustaining domestic demand, employment and productivity.
"The National Budget 2026 reinforces this momentum with RM50 billion in financing and guarantee facilities, with SME Bank entrusted to implement nearly RM2 billion in strategic national initiatives to support MSMEs scaling, technology adoption and productivity enhancement across priority sectors," he said.
The report also foresees domestic growth momentum to remain resilient, supported by sustained MSME activities and continued policy support, which are expected to help cushion the economy against external headwinds from rising protectionism and ongoing geopolitical tensions.
Overall, the growth outlook is broadly aligned with projections by the Ministry of Finance Malaysia (MoF), the International Monetary Fund (IMF) and the World Bank, the bank said.
Among other things, the report highlighted that the services sector is likely to cushion overall growth, manufacturing may face higher tariff exposure, construction activity is set to normalise and the mining sector is expected to remain subdued.
It said the services sector would be supported by resilient household consumption, underpinned by accommodative monetary and fiscal policies, including higher allocations for Sumbangan Asas Rahmah, Sumbangan Tunai Rahmah and Phase 2 civil servant salary adjustments.
This would help ease cost pressures and sustain consumption, it said.
Meanwhile, the manufacturing sector may face higher tariff exposure, as 67.1 per cent of the Industrial Production Index is export-oriented, increasing vulnerability to external demand shocks and trade policy developments.
"Hence, we project inflation to rise moderately to 1.7 per cent in 2026, remaining at a manageable level," said head of economic research Mazlina Abdul Rahman.
For the first 11 months of 2025 (11M2025), headline inflation averaged 1.4 per cent year-on-year, lower than 1.9 per cent in 11M2024.
"Looking ahead, lower Brent crude oil prices, expectations of a stronger ringgit compared to the 2025 average and the absence of further fuel subsidy rationalisation this year should help keep inflation in check," added Mazlina. - Bernama
