KUALA LUMPUR, Aug 26 — Financial advisory firm IPPFA Sdn Bhd has raised Malaysia's gross domestic product (GDP) growth forecast for 2026 to 5.4 per cent from 4.6 per cent previously.
This comes following stronger-than-expected economic performance in the first half of the year and a reassessment of the economy’s underlying growth dynamics.
Its investment strategy director and country economist Mohd Sedek Jantan said that in the first quarter of 2026 (1Q 2026), the national economy expanded 5.4 per cent year-on-year (y-o-y) and six per cent in 2Q 2026, bringing first-half growth to approximately 5.7 per cent.
“The stronger performance is notable given persistent geopolitical uncertainty, higher energy prices, and a still-restrictive global interest-rate environment.
“The forecast upgrade is not simply a response to the 6.0 per cent growth recorded in 2Q 2026. The more important development is that Malaysia has demonstrated a higher degree of economic resilience than previously assumed,” he said in a statement today.
Sedek added that the growth base has broadened across exports, investment, and domestic demand, giving the economy a higher growth floor going into the second half of the year.
IPPFA does not expect Malaysia to sustain the 6.0 per cent growth rate recorded in the second quarter. Instead, growth is forecast to moderate to 5.1 per cent in 3Q 2026 and 4.8 per cent in 4Q 2026, reflecting normalisation in external demand and base effects.
Investment remains another important pillar of the revised outlook. While the pace of gross fixed capital formation moderated during 2Q 2026, the composition of investment remains supportive, particularly in machinery and equipment, information and communications technology, data centres, and other capacity-expanding activities.
Therefore, IPPFA has lowered its 2026 inflation forecast to 1.9 per cent from 2.2 per cent previously, as headline and core inflation remained relatively contained, with July inflation at around 1.8 per cent.
“The remaining risks are concentrated primarily in food, energy and administered prices rather than a broad-based demand-driven inflation cycle. This is important for monetary policy because the composition of growth matters for the inflation impulse,” he said.
Sedek noted that they have revised their year-end-2026 forecast of the United States dollar-ringgit to 4.02 from 4.05 on stronger economic growth, resilient export earnings, contained inflation, and improving external fundamentals.
“Stronger exports provide a structural source of foreign-exchange earnings, while investment in manufacturing, digital infrastructure, and related activities strengthens Malaysia’s productive capacity,” he said.
On the FTSE Bursa Malaysia KLCI, Sedek said it has revised its end-2026 target to 1,800 from 1,780, following stronger domestic economic fundamentals and improved earnings visibility.
