KUALA LUMPUR, May 7 — Bank Negara Malaysia (BNM) said Malaysia’s latest economic indicators point towards continued growth momentum in the first quarter of 2026 (1Q 2026), driven by sustained domestic demand and strong export performance.

In a statement today, BNM said uncertainties surrounding the duration and severity of the West Asia conflict will affect the outlook for domestic growth and inflation going forward.

“Nevertheless, Malaysia’s strong fundamentals will continue to underpin the economy’s resilience, while employment, wage growth and policy measures will remain supportive of household spending.

“Investment activity will be driven by the progress of multi-year projects in both the private and public sectors, implementation of new, smaller-scale public projects, continued high realisation of approved investments, as well as the ongoing implementation of national master plans,” said the central bank.

BNM said the external sector will benefit from continued strength in electrical and electronics (E&E) exports, while tourist spending will be sustained, albeit at a more moderate pace.

“This growth outlook remains subject to downside risks from a prolonged conflict in West Asia and lower commodity production.

“Meanwhile, upside potential to growth could arise from the de-escalation of the conflict, stronger demand for E&E goods and higher tourism activity,” it added.

In 2025, Malaysia’s economy showed strong performance, with gross domestic product (GDP) growing by 5.2 per cent for the full year and accelerating to 6.3 per cent in 4Q 2025.

BNM previously reported that it estimates Malaysia’s economy will grow between 4 per cent and 5 per cent in 2026, with the country’s domestic resilience and diversified export structure continuing to provide a buffer to navigate the current external headwinds, mainly from conflict in West Asia.

Meanwhile, headline and core inflation averaged 1.6 per cent and 2.1 per cent in the 1Q 2026, respectively, said the central bank.

It said higher global commodity prices arising from the West Asia conflict are expected to raise domestic cost pressures, causing inflation to edge higher.

“Nevertheless, the impact on both headline and core inflation in 2026 is expected to remain contained, reflecting domestic policy measures and stable demand conditions, which will mitigate the pass-through of external cost pressures to domestic prices.

“The BNM Monetary Policy Committee acknowledges uncertainties arising from the ongoing conflict in West Asia, with the impact on the global and Malaysian economy depending on how the situation evolves,” it said.

Malaysia’s 1Q 2026 GDP performance will be announced on May 15, 2026. — Bernama