Malaysia’s 2026 growth forecast lifted to 5.5 per cent

HSBC now projects Malaysian GDP growth of 5.5 per cent for 2026, upgrading its earlier 5.2 per cent estimate after third-quarter output exceeded expectations. Its researchers cited strength in domestic spending alongside a surge in electronics exports.

The revised forecast would mark the fastest annual expansion since Malaysia’s 8.7 per cent rebound in 2022. An advance estimate showed third-quarter growth at 5.3 per cent. HSBC also lifted its projection for the final quarter: it now expects 5.3 per cent growth, against 4.7 per cent previously.

According to HSBC, demand associated with artificial intelligence helped electronics exports achieve record growth of 60 per cent year-on-year, using a three-month moving average. The bank also said Malaysia benefited from being a net energy exporter while commodity prices were elevated.

Household consumption and investment were important contributors, HSBC said, with support coming from subsidies, infrastructure development and relatively low inflation. Over the first nine months of 2026, headline inflation averaged 1.8 per cent; core inflation was around 2 per cent.

For Bank Negara Malaysia’s Nov 5 policy meeting, HSBC anticipates no change to the 2.75 per cent overnight policy rate. Although the central bank sounded slightly more hawkish in September, HSBC judged underlying inflation insufficient to prompt an imminent increase.

HSBC’s rate outlook includes a rise of 25 basis points during the first quarter of 2027, taking the rate to three per cent. It characterised that prospective move as pre-emptive normalisation, not an inflation response. Its GDP forecasts for 2027 and 2028 stand at five per cent and 4.7 per cent respectively.