KUALA LUMPUR (Jan 19): Domestic demand and sustained investments are expected to fuel Malaysia’s economic growth in 2026, which will moderate to 4.5%, according to HSBC Global Investment Research. Its forecast is at the top-end of the Ministry of Finance’s (MoF) official forecast of 4%-4.5%.
HSBC projects that the economy will grow 5% in 2025, below advance estimates which put it at 4.9%.
Private consumption is expected to remain the backbone of growth, with continued labour market recovery coupled with retail sales from its booming tourism sector, it said in a statement following an outlook briefing on Monday.
It said resilient trade seen in the fourth quarter of 2025 (4Q2025) is also a positive sign. Although exports have moderated as front-loaded trade fades, Malaysia continues to benefit from the still-elevated AI-driven demand.
“While both public and private investments have moderated from their earlier double-digit growth, the moderation is rather modest. They continue to benefit from an infrastructure push and data centre construction,” it added.
Coupled with inflation expected to remain well-contained at 1.7% in 2026, HSBC sees Bank Negara Malaysia keeping the overnight policy rate steady in 2026.