KUALA LUMPUR: Malaysia is on a relatively stable footing two weeks into 2026, with Bank Negara Malaysia expected to maintain a mildly accommodative Overnight Policy Rate at 2.75%.
Maybank Investment Banking Bhd group chief economist Suhaimi Ilias said this stance provides a supportive domestic backdrop amid uneven global growth.
More broadly, he said, the continuation of accommodative monetary policy, coupled with the prospect of additional interest rate cuts in the first half of 2026, should help Malaysia cushion downside risks to the global economy.
“These conditions are expected to act as a mitigating force against external headwinds. What is particularly noteworthy is the resilience of global economic activity, despite last year’s tariff actions and trade policy uncertainty under the US President Donald Trump administration,” he said in his presentation at the Malaysia 2026 Macro and Market Outlook virtual conference today.
Suhaimi noted that a key factor has been the artificial intelligence-driven investment cycle, which has released significant pent-up demand.
The strong resurgence of major US technology firms has had positive spillover effects, most notably in global semiconductor sales, reinforcing growth momentum across the broader technology supply chain.
“By the end of last year, forecasts were revised sharply upwards, with global semiconductor sales now expected to grow by 26% by 2026. This trend is particularly significant for the Asean-6 economies, including Malaysia, given their deep integration into the global electronics and electrical supply chain.
“We see that strong global chip sales would therefore be supportive of Malaysia’s electronics sector, reinforcing export performance. Importantly, this outlook is not merely about mitigating downside risks to growth; it also points to potential upside drivers that warrant close attention,” Suhaimi said.
For Malaysia, he added, the growth narrative in recent years has been characterised by resilient domestic demand, offsetting periods of volatility in net external demand.
“We continue to monitor developments around semiconductor tariffs. The US has imposed a 25% tariff on advanced and AI-related chips exported to China by companies such as Nvidia and AMD, including those manufactured in Taiwan, he said.
Suhaimi expressed his expectation for further clarity on the potential introduction of product-specific semiconductor tariffs over the next 90 days.
He said the investment upcycle to Malaysia has been recurring since 2024, and recent data continue to reinforce this trend.
“Based on available figures, approved investments to Malaysia rose 13% in the first nine months of 2025, indicating that 2025 is shaping up to be another solid year, potentially matching or even exceeding 2024 levels.
“More importantly, investment approvals serve as a leading indicator for actual capital deployment, typically leading realised investment by 18 to 24 months. This suggests that the current momentum in approved investments could translate into sustained investment growth through 2027,“ he said.
Leading the investment upcycle is technology, encompassing investments in semiconductors and chip manufacturing, as well as digitalisation initiatives, data centres and supporting infrastructure, he noted.
Further, Suhaimi said energy transition is the second investment cluster, extending beyond renewable generation to include grid upgrades and expansion, as well as battery energy storage systems, which are increasingly critical to supporting renewable energy deployment.
“Approved investments, particularly within domestic direct investment, also point to a sizeable property-related component, driven primarily by industrial real estate, notably the development of industrial parks.”
Suhaimi said the expansion of industrial parks is generating positive spillovers across supporting sectors, including connectivity, transport infrastructure, and utilities such as power and water.
Importantly, indicators of investment realisation, such as bank loans for industrial buildings, factories, and land, continue to show strong momentum of around 11% to 12% year over year, he added.
Down south, Suhaimi said, the Johor-Singapore Special Economic Zone has begun to yield tangible investment outcomes over the past year.
“Based on nine-month 2025 investment approval data, Johor and Singapore rank at the top, with Johor by state-level investment approvals and Singapore as the leading source of foreign direct investment into Malaysia.
“Looking ahead, particularly in the first half of this year, a new catalyst is expected to help sustain momentum in the investment upcycle: the introduction of the New Investment Incentive Framework (NIIF),” Suhaimi said.
He noted that the NIIF was originally slated for announcement in the third quarter of last year but the framework was postponed.
The 2026 Budget indicated that the NIIF for manufacturing would be announced this quarter, followed by the NIIF for services next quarter.
For 2026, Suhaimi stated that the outlook indicates moderate but resilient global growth, supported by policy measures, limited trade disruptions, and an AI-driven technology upcycle that provide significant offsets to external uncertainties.
Malaysia’s growth continues to be underpinned by strong domestic demand, supported by healthy income growth, a tight labour market, robust tourism activity and a multi-year investment upcycle spanning technology, energy transition, industrial real estate and both private and public sector capital spending.
“While external risks remain – particularly around trade policy, semiconductor tariffs and the durability of the AI cycle – current indicators suggest these are more likely to moderate growth rather than derail it, leaving Malaysia well positioned to sustain momentum into 2026 and beyond,” said Suhaimi.
