KUALA LUMPUR: Malaysia’s consumer spending is expected to grow in 2026, underpinned by stable economic growth and employment outlook, said BMI, a Fitch Solutions company.
In a statement, it said household spending is projected to grow by 4.2 per cent year-on-year (y-o-y) in real terms to RM1.10 trillion (at 2010 prices), well above the pre-COVID-19 (2019) value of RM779.7 billion.
"Additionally, the country’s tight labour market will support spending, with real wage growth forecast to comfortably outpace inflation and underpin purchasing power over the year.
"Over 2027, total household spending will grow at a real rate of 4.1 per cent y-o-y, reaching RM1.14 trillion,” it said.
However, it said the spending will be constrained by high debt levels and related debt-servicing costs, with little further relief on the horizon, as Bank Negara Malaysia is expected to leave the overnight policy rate unchanged at 2.75 per cent throughout the year.
Meanwhile, BMI forecasts Malaysia's economic growth to average 4.3 per cent y-o-y in 2026, remaining broadly stable with real gross domestic product growth of 4.0 per cent y-o-y in 2027.
Unlike its regional peers, Malaysia’s unique position as a net energy exporter will support export earnings, it said.
"However, we expect stronger petroleum-related revenues and dividends from Petroliam Nasional Bhd (Petronas) to provide a meaningful offset to rising subsidy costs and reinforce policymakers’ broader commitment to fiscal consolidation.
"This means that fiscal policy will be contractionary, decreasing household disposable income,” it said.
On employment, BMI expects it to average 3.1 per cent of the labour force over both 2026 and 2027, underpinned by strong foreign investments, improving tourism sector performance, and increased activity in key sectors, including agribusiness, electronics, and manufacturing.
"However, should economic conditions worsen in the market -- for example, if growth in mainland China slows even more than we currently expect -- there is a risk of elevated unemployment, which will quickly feed through to a weaker consumer outlook,” it said. - Bernama
