KUALA LUMPUR (Jan 19): Malaysia is one of Asia's bright spots in 2026 with its “two‑engine” growth model of robust domestic demand and exports driving stronger-than-expected momentum despite lingering global uncertainty, Sumitomo Mitsui Banking Corporation (SMBC) head of Asia macro strategy Jeff Ng said.

Recent data suggests that Malaysia is holding up well going into 2026, amid concerns whether the trading economy can weather the external shocks that have dominated the global landscape in recent years, said Ng during the SMBC 2026 Global Economic Outlook webinar.

“2026 is shaping up as a year of uneven growth. Tech-linked economies like Malaysia, Singapore and Taiwan are expected to outperform, while major economies face headwinds,” Ng said.

There is scope for stronger external demand beyond the US, said Ng, which should address potential tapering from front-loading import activities and an artifical intelligence (AI) investment cycle that currently dominates the headlines.

Malaysia's economy is also anchored on household consumption, government spending and net exports, while structural tailwinds including the Johor-Singapore Special Economic Zone and rising investments in data centres lend further support to its growth outlook, Ng said.

While Ng cautioned corporates that ringgit strength could pose challenges for price-sensitive, non-technology exporters, technology-related sectors are likely to be less affected due to their focus on market share and long-term growth.

That said, the ringgit is unlikely to repeat its recent strong performance. “We don’t expect the ringgit to gain by another 10%. Perhaps it could be 4% to 5% as the US dollar weakens further,” he said.

In the broader global context, the webinar highlighted three key themes for 2026. First is uneven growth, or a “K-shaped” trajectory, where tech-linked economies such as Malaysia, Singapore and Taiwan are expected to outperform, while major economies including the US, Australia, the eurozone, India and China face headwinds.

Second is winners and losers from AI, with technology exporters benefitting from productivity gains and long-term growth opportunities, while AI adoption may widen inequality, create job displacement and keep certain tech-related inflation sticky.

Third is volatility and event risks, including potential Federal Reserve rate cuts that could weaken the US dollar, corrections in AI-related stocks that could trigger global risk aversion, and geopolitical flare-ups that may prompt short-lived but sharp market shocks.

Malaysia's full-year GDP growth is tracking around 4.9%, with 4Q2025 growth seen at 5.7% based on official estimates.

Leading indicators continue to point to modest expansion, with growth in 2026 still seen closer to 4.5% despite lingering downside risks, according to economists' forecasts.

Malaysia is also helped by supportive external buffers, with the country expected to maintain a current account surplus while tourism activities continues to recover, supported by steady arrivals from China, Ng said.

 Uploaded by Magessan Varatharaja