CIMB Securities lifts 2026 GDP growth forecast to 5pct on domestic strength

KUALA LUMPUR: CIMB Securities Research has increased its forecast for Malaysia's 2026 gross domestic product (GDP) growth to five percent from 4.8 percent, citing stronger-than-expected domestic activity. The research firm lowered its third quarter (Q3) 2026 GDP nowcast to 5.0 percent from 5.2 percent following weaker-than-expected July Industrial Production Index (IPI) data. However, CIMB Securities noted that the decline in domestic manufacturing, as expected, has not yet materialized.

The firm pointed out that domestic-oriented production outside the motor vehicle sector performed well in July, while overall manufacturing output continued to expand sequentially. Consequently, CIMB Securities has raised its Q3 2026 GDP growth forecast to 4.5 percent from 4.0 percent previously, and its full-year 2026 forecast to 5.0 percent from 4.8 percent previously. This reflects stronger-than-expected resilience in domestic activity.

Regarding the overnight policy rate, CIMB Securities maintained its outlook, with inflation trajectory being the key factor in determining the timing of a rate hike. However, the firm warned that the renewed escalation in the Middle East remains a downside risk to growth, and prospective US semiconductor tariffs could negatively impact electrical and electronics manufacturing and exports if implemented.