KUALA LUMPUR: Bank Negara Malaysia (BNM) is expecting Malaysia’s growth for this year to be slightly higher than initially estimated, with a new projection coming in at between 4% and 5% compared to an earlier 4% to 4.5%.
BNM governor Datuk Seri Abdul Rasheed Ghaffour said this will be supported by resilient household spending, further investment realisations, continued export growth and steady tourism performance.
“Malaysia enters 2026 from a position of strength.
“When the government came up with the projection of 4% to 4.5%, this was last year, and it was before our third and fourth quarter performances, which were very good, so that has been taken into account.
“We also have a strong banking system,” he said at a dialogue held in conjunction with the release of the central bank’s Annual Report 2025 here yesterday.
On the impact of the Middle East war on such optimism, Abdul Rasheed said the fresh projection had already taken into account several scenarios but if the war were to be prolonged and things get “really bad”, the central bank could revisit the need to revise the forecast again.
Notably, in 2025, the Malaysian economy grew by 5.2%.
Headline inflation this year is expected to average between 1.5% to 2.5%, slightly higher than the 1.4% in 2025.
Since the start of the war and as of mid-March, the country’s monthly petrol subsidy bill has jumped to RM2bil, while the diesel subsidy has also risen to RM1.2bil per month, bringing the total bill to RM3.2bil per month, up from the previous RM700mil.
Abdul Rasheed said while upside risks stemming from developments in global commodity and energy prices remained, targeted policies were in place to help cushion the impact on households and businesses.
He said a broad-based stimulus package was not immediately necessary to help businesses in the wake of the current war and global uncertainties.
“Banks are ready to help borrowers if they face any issues,” he said, adding that any additional support must be holistic in nature. “We cannot approach this matter on a silo basis.”
On the ringgit, Abdul Rasheed said the local note’s performance remained market-driven but its outlook remained positive, buoyed by strong fundamentals and prospects, sustained investor engagement and ongoing domestic reform measures.
Deputy governor Adnan Zaylani Mohamad Zahid said the central bank had been actively engaging with investors, exporters and corporates to repatriate their export proceeds and investment income back into Malaysia and convert them into the local unit.
To be sure, the ringgit has been among the Asian region’s best-performing currencies in the last year, skyrocketing against the greenback to levels not seen since 2018.
Nevertheless, the war has since seen it weakening.
Abdul Rasheed said with the current global conflict, the ringgit could continue to see more movements along the way.
“However, these are cyclical, the most important thing is the underlying fundamentals, we have seen healthy flows,” he said, adding that the central bank remained committed to ensuring orderly markets.
