Standard Chartered’s Edward Lee and Jonathan Koh highlight that Malaysia’s economy grew 5.2% in 2025 after 5.1% in 2024, driven by strong domestic confidence, AI-related investment and accommodative policy. They expect GDP growth to moderate to 4.5% in 2026, above official projections, and see Bank Negara Malaysia keeping policy rates stable near term despite upside risks to growth.
Growth resilience and policy rate outlook
“Malaysia’s economy expanded strongly by 5.2% in 2025, after solid 5.1% growth in 2024, despite trade uncertainty from US-led tariffs.”
“We currently expect growth to ease to 4.5% in 2026 (versus the government’s forecast of 4.0-4.5%) on some fading of front-loading activity and a lagged tariff impact.”
“That said, there is upside risk to 2026 growth projections on the back of continued strong AI-related demand and positive domestic sentiment.”
“The stronger-than-expected Q4 performance may raise questions about whether Bank Negara Malaysia (BNM) will unwind its pre-emptive cut of July 2025.”
“While this is a possibility, we think still-benign inflation and lingering external uncertainty might keep BNM on hold as it assesses growth in the next 1-2 quarters.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Source: https://www.fxstreet.com/news/malaysia-solid-growth-outlook-supports-ringgit-standard-chartered-202602131856
