Domestic demand, export growth to drive 4.5-4.7pct GDP growth

 

Investment banks and research firms have revised or maintained their 2026 gross domestic product (GDP) forecasts to between 4.5 and 4.7 percent, driven by stronger domestic demand and export growth, as well as ongoing investment realisation.

Kenanga Investment Bank Bhd said it maintained its 2026 GDP growth forecast at 4.5 percent, with upside potential toward 5.0 percent if current momentum holds, with domestic demand to anchor the growth, backed by firm labour-market conditions, rising household incomes, and continued targeted aid.

“The services sector, particularly tourism, should deliver a strong uplift as capacity ramps up under Visit Malaysia 2026.

“Investment momentum should stay solid with project rollouts of key national frameworks, namely under the New Industrial Master Plan 2030, National Energy Transition Roadmap, National Semiconductor Strategy, AI Nation Framework, and 13th Malaysia Plan,” it said in a research note.

Meanwhile, Apex Securities Bhd said it is revising its 2026 GDP forecast higher to 4.7 percent year-on-year (y-o-y) from 4.3 percent, driven by firmer GDP growth momentum in the fourth quarter of 2025.

On the domestic front, it said stronger tourist arrivals under Visit Malaysia 2026, alongside continued policy support for lower-income households, should sustain resilient private consumption.

“Meanwhile, investments led by ongoing data centre expansion are expected to generate positive spillovers into higher value-added activities, including information and communication technology services,” the firm said.

Domestic demand drives growth

Hong Leong Investment Bank Bhd has also revised its 2026 GDP forecast upward to 4.7 percent and anticipates domestic demand to remain the primary growth engine, anchored by a healthy job market, supportive policy measures, and continued investment activity.

“Upside factors include an easing in global policy uncertainty and stronger-than-expected demand for electrical and electronics goods.

“Nonetheless, downside risks remain, stemming from a rising protectionist trend and weaker external demand,” it said.

On monetary policy, the firm and investment banks expected Bank Negara Malaysia to keep the overnight policy rate at 2.75 percent throughout 2026.

- Bernama