KUALA LUMPUR: Malaysia's economy could record another year of growth exceeding 5.0 per cent, supported by robust exports and resilient domestic spending, said MBSB Investment Bank Bhd.
The investment bank expects domestic consumption to remain resilient, supported by a stable labour market, rising incomes and government policy measures, including cash transfers and targeted subsidies, which have helped contain price pressures arising from elevated global energy prices.
It also said higher tourist arrivals would further support the consumption outlook.
"We are putting our 2026 gross domestic product (GDP) growth forecast (currently at 4.5 per cent) under review following the stronger-than-expected GDP growth performance in the second quarter (2Q) of 2026, which accelerated to 5.8 per cent year-on-year (y-o-y) (1Q 2026: 5.4 per cent y-o-y),” it said in a research note today.
Nevertheless, MBSB Investment Bank said it remains wary that downside risks to growth could emerge mainly from the external front.
"Renewed and prolonged supply disruptions could keep cost pressures elevated. Final demand from both the domestic and external markets could also weaken amid higher inflationary pressures,” it said.
It also said tighter trade rules could weigh on external demand, particularly from the United States.
Similarly, Kenanga Investment Bank Bhd
expects Malaysia's economy to expand by more than 5.0 per cent this year, above its current forecast range of 4.5-5.0 per cent.
It said the manufacturing Purchasing Managers' Index (PMI) reading, which remained above the 50-point expansion threshold, signalled continued growth in manufacturing activity, supporting a positive contribution to Malaysia's 3Q 2026 GDP growth.
The manufacturing PMI remained unchanged at 50.7 in July from June, indicating that the sector entered the second half of 2026 on a stable footing despite persistent geopolitical uncertainties and external headwinds.
Kenanga said resilient new orders strengthened the case for an upward revision to its third-quarter (3Q) GDP growth forecast.
However, it said weaker business confidence, which fell to a three-month low, and a 0.2 per cent y-o-y decline in employment in July, suggested manufacturers remained cautious amid persistent geopolitical risks. - Bernama
