KUALA LUMPUR (July 17): Malaysia's economic outlook is unlikely to be affected by the upcoming general election, as the country's stable and predictable policies will continue to support growth, according to AmBank Group chief economist Firdaos Rosli. 

He said any election-related impact would likely be limited to market sentiment, with little effect on the broader economy, when asked whether Malaysia's entry into a new election cycle could affect the country's economic outlook. 

"I don't think that would have an impact on the economy from the macroeconomic standpoint," he said, adding that whether an election is held earlier or later would mainly affect financial market sentiment, including the ringgit and bond yields.

“We are blessed to have policy stability, with or without changing governments,” Firdaos said at a media briefing on Friday.

He said the country’s policies have remained largely predictable ever since the change of government in 2018.

"This is exactly what investors want: predictability... Malaysia offers that predictability perspective. They [investors] don't need instability because the world is going through a phase of instability and uncertainty because of geopolitics [tension]," Firdaos added. 

The question comes in the wake of Johor's recent state election, with attention now turning to the upcoming Negeri Sembilan state election. 

Firdaos said the bigger risks to the economic outlook are inflation, slower consumer spending, and global oil prices. He sees inflationary pressures trending upward in the second half of this year, which could weigh on private consumption.

Inflation is expected to pick up in the second half of the year to around 2.4%, although AmBank maintained its full-year inflation forecast at 2%.

He said softer household spending is expected to contribute to a moderation in Malaysia's economic growth in the second half of the year, with the full-year gross domestic product (GDP) forecast to grow at 4.8%, easing from 5.2% in 2025.

Still, Firdaos said AmBank had raised its 2026 GDP growth forecast to 4.8% from 4.5%, due to stronger-than-expected economic performance in the first half of the year and supported by government support measures and artificial intelligence-driven investments.

Malaysia's economy expanded 5.4% in the first quarter, while the advance estimate showed GDP growth accelerated to 5.8% in the second quarter.

On another key risk, Firdaos said one of the biggest risks in the second half of this year is the depletion of global strategic petroleum reserves. While weaker Chinese crude demand has so far helped keep global oil prices in check, he said reserve levels have not been replenished since the Russia-Ukraine war, leaving the global oil market "living on borrowed time".

Against that backdrop, AmBank assumes Brent crude oil prices will average around US$90 (RM367.47) per barrel for 2026, said Firdaos.

However, he said Malaysia is no longer expected to benefit from higher oil prices to the same extent as in previous commodity cycles because the country has become a net oil importer.

AmBank also maintained its expectation that Bank Negara Malaysia will keep the overnight policy rate unchanged at 2.75% through end-2026, while forecasting the ringgit to end the year at RM4.09 against the US dollar.