PVT Consumption, Tourism Likely To Boost Malaysia's Economic Growth In 2026 - AmBank

KUALA LUMPUR, Jan 22 (Bernama) -- Malaysia's economy is set to remain resilient this year, with growth likely reaching 4.5 per cent, anchored by strong private consumption and tourism drive.  

AmBank chief economist Firdaos Rosli said domestic fundamentals remain supportive amid the government’s continued use of cash assistance as a key policy lever to sustain household spending.

He said such measures have helped to keep private consumption at a healthy level while ensuring that broader segments of the population benefit from economic growth. 

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“In many parts of the world, including the United States (US), the debate now centres on how pronounced the K-shaped economy has become,” Firdaos told a media briefing on Malaysia’s macroeconomic outlook for 2026 here today.

However, he said growth risks have shifted to a more symmetric outlook amid fluid global developments, particularly as tariff impacts become clearer and geopolitical risks, including the US-Venezuela tensions, weigh on the oil and gas market.

The bank also raised its gross domestic product (GDP) growth forecast to 4.9 per cent from the estimated 4.6 per cent previously, with recent trade agreements offering greater clarity and likely to support growth in 2026. 

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The bank also projected that the manufacturing sector would grow by 2.8 per cent this year.   

Firdaos added that the tariff measures imposed by the US were already largely priced in and unlikely to pose a material downside to Malaysia’s economy at this stage. 

At the same time, he said that the front-loading impact was expected to moderate this year, but he does not foresee any sharp downturn with Malaysia having diversified its export markets.

"The prospect of us signing maybe one or two more free trade agreements would probably give some more impetus for our exporters to also diversify their portfolio and not be overly dependent on one or two markets.

“From our perspective, this is likely to be the new normal, assuming there is no reversal following a ruling by the US Supreme Court,” he said, adding that the tariff level faced by Malaysia remains relatively lower than that of many neighbouring economies.

He added that exporters had rushed shipments ahead of key tariff deadlines, a trend that began even before the US presidential election as markets anticipated the return of Donald Trump.

“The front-loading effect happened before the tariffs, and then again when the tariffs were announced. What we do not know is whether the dissipation of that effect will come earlier or later,” he said.

Nonetheless, Firdaos said that continued capital expenditure momentum in the US, particularly in artificial intelligence-related investments, could delay any near-term softening in trade demand.

On another note, AmBank also viewed the government’s target of reducing fiscal deficit from 3.8 per cent in 2025 to 3.5 per cent in 2026 as achievable, assuming that there are no unforeseen shocks that necessitate additional fiscal support.

The bank also anticipates the government’s statutory debt -- which stands at 63.5 per cent of the GDP as of June 2025 -- to remain within the 65 per cent debt ceiling.

“While the upward trend in the debt service ratio warrants monitoring, risks are contained by the low share of external debt and the largely domestic debt profile,” it added. 

-- BERNAMA