KUALA LUMPUR: Resilient domestic demand, sustained investment activity and supportive export prospects should underpin Malaysia's fourth quarter 2026 (4Q 2026) growth momentum, according to CGS International Securities Malaysia.
In a note today, the brokerage said other key drivers include cost-of-living and income support measures, the tourism sector, sustained investment momentum, and a supportive export outlook.
CGS International said the government has raised electricity and fuel assistance thresholds and introduced a one-off RM1,000 payment to about 53,000 taxi, rental car, and school bus drivers.
These measures should help ease household cost pressures, support disposable income and sustain consumer spending in 4Q 2026, it said.
Citing Tourism Malaysia, it said Malaysia recorded 28.8 million tourist arrivals in the first eight months of 2026 (8M 2026), keeping it on track towards the government's 47 million visitor target under the extended Visit Malaysia 2026 campaign.
Thus, sustained visitor arrivals and spending should continue supporting services sector activity.
"Continued investments in semiconductors, data centres, digital infrastructure and energy transition projects should support private investment growth.
"Working capital loan growth accelerated to a record-high 5.3 per cent year-on-year (y-o-y) in August 2026, suggesting that corporate expansion plans remain intact despite external uncertainties,” it said.
CGS International expects external demand for Malaysia’s exports to remain supported by the ongoing artificial intelligence (AI)-driven semiconductor upcycle, with the Semiconductor Industry Association projecting global semiconductor sales to exceed US$1.6 trillion in 2026.
Meanwhile, according to the brokerage plantation analyst, crude palm oil exports could improve following India's reduction of palm oil import duties from 10 to 5.0 per cent effective Sept 24, 2026, while lower palm oil prices should also improve the commodity's competitiveness against competing vegetable oils
However, CGS International said risks to its outlook stem primarily from external factors, including a sharper-than-expected slowdown in the global technology cycle and renewed trade uncertainties.
"Nonetheless, we believe these risks are mitigated by resilient domestic demand, continued private investment expansion, supportive tourism activity, and sustained strength in export-oriented manufacturing.
"We maintain our 2026 gross domestic product growth forecast of 5.5 per cent y-o-y,” it added. - Bernama
