KUALA LUMPUR: HSBC has upgraded Malaysia’s 2026 economic growth to 5.5 per cent from 5.2 per cent, the third consecutive year above the five per cent threshold, according to HSBC.
In its HSBC Global Investment Research, senior ASEAN economist Yun Liu said Malaysia’s growth engine is hardly slowing down as resilient domestic demand and better-than-expected trade outturn kept momentum intact.
"We will get more details from the expenditure side of gross domestic product (GDP) breakdown in the final third quarter (3Q) GDP release on Nov 18, but both private consumption and investment remain supportive growth pillars.
"Consumers are in a much better position to spend than their regional peers as Malaysia sees the lowest inflation print in the region, thanks to the ongoing generous subsidies," she said in a research note today.
She said Malaysia has the lowest inflation print in ASEAN, with headline inflation averaging 1.8 per cent year-on-year (y-o-y), and core inflation remaining benign around 2 per cent y-o-y.
"This is because Malaysia continues to roll out generous subsidies, particularly RON95. Malaysians still enjoy RON95 at an extremely low price of RM1.99 per litre, with a monthly quota of 300 litres per eligible user.
"There may be some concerns whether strong growth will lift local inflation," she said.
Nevertheless, she said artificial intelligence outperformers in Asia - including Taiwan, South Korea, Singapore, and Malaysia - have not seen a broad-based inflation pick-up.
On the overnight policy rate (OPR), Yun Liu said Bank Negara Malaysia (BNM) is likely to normalise this, not as an inflation response, but as a pre-emptive move. BNM has kept its policy rate unchanged at 2.75 per cent since September 2025, the report said.
"Overall, we do not expect a hike in November, but it will be interesting to see whether next week’s meeting will send stronger hawkish signals, paving the way for a hike next year.
"We have pencilled in a 25 basis points rate hike in the first quarter of 2027," she said. - Bernama
