Malaysia forecasts 4.3-4.7% economic growth in 2026

Malaysia’s economy is expected to maintain steady growth in 2026 despite persistent global uncertainties, according to economic experts.

Affin Bank chief economist Alan Tan Chew Leong said that although global risks are rising, including pressure from the U.S. economy, geopolitical tensions and shifting trade tariffs, early warning indicators do not signal a recession globally or in Malaysia.

He noted that the manufacturing Purchasing Managers’ Index (PMI) remains above the 50-point expansion threshold, while major central banks still have policy space to support growth if needed.

Malaysia’s recession risk is further cushioned by its diversified exports, resilient domestic demand and stronger construction activity, particularly from data-center investments. Manufacturing remains stable, and tourism is set for a strong rebound ahead of Visit Malaysia Year 2026.

Economists project Malaysia’s GDP growth at 4.3-4.7% in 2026, following 4.7% growth recorded in the first nine months of 2025.

Sunway University economist Dr. Yeah Kim Leng said Malaysia is on track to avoid recession in 2025, but global conditions remain fragile due to high public debt, climate risks and geopolitical tensions. He described the 2026 forecast as realistic but cautioned that uncertainties may intensify.

World Bank chief economist for Malaysia Dr. Apurva Sanghi noted that 2026 will be a key test of whether domestic demand can continue to anchor growth, especially as the United States’ revised tariff framework takes effect.

Under the October 26 trade agreement, the U.S. will maintain a 19% tariff on Malaysian goods, although 1,711 product lines will see reduced or eliminated tariffs once legal procedures are completed.

Business Times quoted a fund manager estimating that Malaysia’s effective tariff burden is closer to 12-13% due to preferential trade agreements and exemptions, giving Malaysian exporters a competitive edge over regional peers facing higher effective tariffs.