Bank Negara expects 5pct GDP growth for 2026

KUALA LUMPUR: Bank Negara Malaysia remains optimistic about Malaysia's economic growth, projecting it to reach around five percent this year. However, the actual growth could be slightly higher or lower than this estimate. Bank Negara Governor Datuk Seri Abdul Rasheed Ghaffour revealed that the economy has been outperforming expectations over the past three quarters, driven by a widespread increase in both domestic and external demand.

Gaffour expressed confidence in the five percent growth projection for this year during a press conference following the release of Malaysia's second-quarter GDP data. He emphasized that growth has remained broad-based, with domestic demand as the primary driver, while the external sector provided substantial support in the latest quarter and the previous quarter.

In terms of exports, both electrical and electronics (E&E) and non-E&E products have seen growth, while the information and communications technology (ICT) services sector has expanded as well.

Gaffour stated that consumption, investment, exports, and tourism are expected to continue supporting economic activity in the second half of the year, although the individual contributions of these drivers may change due to global uncertainties. However, he noted that risks to the outlook are balanced, with potential upside risks stemming from the de-escalation of the Middle East conflict, sustained E&E demand, and strengthened tourism activity.

Conversely, a prolonged Middle East conflict and lower-than-expected production could negatively impact growth.

The central bank governor reiterated that the economy is not overheating despite the strong performance over the past three quarters. He assured that demand is steady and resilient but not excessive. Gaffour indicated that the central bank would continue to monitor developments and determine if a revision of the growth forecast is necessary.