Malaysia’s economy to grow 4.3% this year: MARC Ratings

KUALA LUMPUR: Malaysia’s economy is forecast to grow by 4.3% in 2026, supported by continued domestic demand and sustained investment activity, driven by rapid demand for electrical and electronic products as well as data centre infrastructure.

According to Malaysian Rating Corporation Bhd (MARC Ratings), the outlook is underpinned by moderate inflation levels, which it projects to be at 1.6% in 2026, alongside steady income growth. 

Externally, it noted that Malaysia’s export performance is expected to benefit from stronger regional trade flows due to improved trade developments following the 47th Asean Summit. 

“While the overall outlook has brightened, the upcoming Trump-Xi meeting in the first half of 2026, together with evolving geopolitical dynamics, will shape the trajectory of trade policy. 

“The recent geopolitical developments in Latin America are unlikely to materially affect Malaysia’s trade prospects. As a net crude oil importer, Malaysia is expected to benefit from lower oil prices stemming from increased supply,“ it said. 

As for the currency market, MARC Ratings expects the ringgit to appreciate to around 3.93 against the US dollar by mid-2026, supported by steady foreign portfolio inflows, subdued inflation levels, and firmer external sentiment that is expected to boost the trade surplus. 

At the end of 2025, the ringgit rallied 10.1% against the greenback, securing its position as Asia’s best-performing currency. 

“The resilient domestic fundamentals and ongoing fiscal consolidation, with the fiscal deficit projected at 3.5% of gross domestic product in 2026 (2025F: 3.8%), will support the anchoring of the 10-year Malaysian Government Securities yield at around 3.35%-3.40% in 2026,“ it added. 

According to MARC Ratings, while global growth is set to moderate in 2026 amid structural constraints and ongoing geopolitical uncertainties, Malaysia’s economic outlook remains relatively resilient. 

Steady domestic demand, sustained investments linked to the artificial intelligence upcycle, low inflation, institutional reforms and continued fiscal consolidation are expected to underpin economic stability, supporting the ringgit and anchoring domestic bond yields. 

“However, an external risk to monitor in 2026 is Japan’s exit from ultra-low interest rates, which raises the prospect of a partial unwinding of long-standing yen carry trades. Such repositioning could inject volatility into emerging markets, particularly those with substantial foreign participation,“ it said.  – Bernama