Malaysia’s growth expected to hold at 4-5pc despite external uncertainties, says BNM governor

KUALA LUMPUR, July 10 — Malaysia’s economy continues to show resilient growth despite the ongoing West Asia conflict, Bank Negara Malaysia (BNM) Governor Datuk Seri Abdul Rasheed Ghaffour said.

The economy expanded 5.4 per cent in the first quarter of the year.

In an interview with Bernama, he said high-frequency indicators point to some moderation in economic activity in the second quarter (2Q) of 2026. He, nevertheless, assured that the economy continues to demonstrate resilience despite external uncertainties.

“We can expect growth to moderate, but it should still be good growth considering global developments,” he said, adding that the central bank remains confident that full-year growth will stay firmly within its 4-5 per cent forecast.

He did not rule out the possibility of full-year growth being in the upper half of that range.

“Growing at 4 to 5 per cent during this period of challenges is credible,” he said. 

The International Monetary Fund (IMF), in its latest World Economic Outlook Update, has maintained Malaysia’s economic growth projection at 4.7 per cent in 2026.

Malaysia is benefiting from data centre activities and the upturn in the global technology cycle, IMF said.

Malaysia’s 2Q 2026 gross domestic product (GDP) advance estimate will be released on July 17, with official GDP figures scheduled for release in August.

BNM’s confidence in the forecast rests on several factors, including the easing of the West Asia conflict from its earlier peak and the stabilisation of global supply conditions as businesses adapt by diversifying and sourcing alternative supplies, he said.

“Energy supplies have stabilised. People do find ways to get supplies. Businesses have been agile, and that has helped stabilise prices,” he said.

Domestically, Abdul Rasheed said demand remains resilient, supported by a stable labour market, robust exports and sustained investment activity.

On the unemployment rate, he said it has remained at around 2.9 to 3 per cent, indicating near full employment.

While some businesses have become more cautious about hiring amid the uncertain global environment, they continue to largely retain existing workers.

“Strong export growth should also provide some support to the labour market, and in turn, support private consumption,” he said.

He added that growth engines will continue to run, with the economy set to benefit from demand related to artificial intelligence and the electrical and electronics sector.

Investment flows continue to be strong, driven by ongoing and new projects, such as data centre projects, alongside the continued implementation of approved investments.

“The rate of implementation of approved investments remains very high, translating into real economic activity,” said Abdul Rasheed.

There are also some small projects by the government and the private sector which help ensure economic activities continue.

“All these are the supportive factors for domestic growth,” he added. — Bernama