Bank Negara Malaysia is projecting a gross domestic product (GDP) growth of 4% to 5% for 2026. This outlook remains positive despite the ongoing war involving Iran, which has triggered a surge in global crude oil prices and led to energy crises in several nations.
The latest figures represent a slight upward revision from the initial government forecast of 4% to 4.5% for the year. This momentum follows a strong performance last year, where the country recorded a 5.2% GDP growth.
The central bank identifies investment expansion, resilient domestic spending, a robust tourism sector, and high export demand as the primary engines for this continued growth. In particular, global demand for electrical and electronic products is expected to remain sustained throughout the year.
Resilience against global energy volatility
The tourism industry is anticipated to benefit significantly from the Visit Malaysia 2026 campaign. While there have been reports of cancelled trips as an immediate reaction to the Middle East conflict, the central bank expects steady arrivals to bolster the sector in the long term.
Governor Abdul Rasheed Ghaffour noted that while uncertainties and the Middle East conflict add layers of precariousness to the outlook, Malaysia is well-positioned to handle these challenges. He highlighted that the nation’s diversified export structure and its status as a net energy exporter provide a cushion against rising global commodity prices.
In the 2025 annual report released today, the governor stressed that the impact of external conflicts would depend largely on their duration and severity. However, he maintained that the country’s economic fundamentals remain solid.
Commitment to long-term fiscal reforms
The central bank also emphasized the importance of strengthening policy buffers through ongoing reforms. Abdul Rasheed Ghaffour pointed out that measures implemented over the past year, such as the targeted RON95 petrol and diesel subsidies, are essential for inclusive and sustainable growth.
These reforms are viewed as necessary steps toward Malaysia’s goal of becoming a developed, high-income nation. The governor stated that the economic path must be paved with shared prosperity, focusing on the creation of better-paying jobs and supporting local businesses and households.
Bank Negara Malaysia has affirmed its readiness to manage risks associated with excessive market volatility. The central bank intends to remain vigilant as the year progresses to ensure orderly market conditions during this period of heightened global uncertainty.
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