KUALA LUMPUR, Oct 2 — Malaysia's gross domestic product (GDP) for 2026 is projected at 5.4 per cent, underpinned by resilient domestic demand and sustained strength in electric and electronic (E&E) exports, said RHB Group.
Its group chief economist and head of market research Barnabas Gan said the bank revised the headline inflation forecast to 1.9 per cent for 2026 from 2.1 per cent previously, reflecting softer-than-expected price pressures.
For the first eight months of the year, inflation averaged 1.8 per cent, alongside the restoration of the BUDI95 monthly quota and an increase in the diesel subsidy quota from September.
"For the rest of 2026, the inflation trajectory will be shaped by global commodity price movements, changes in domestic policies, as well as potential upside from food inflation," he said in RHB’s Global Economics Outlook for 4Q 2026 today.
Gan added that domestic policy measures, such as RON95 and diesel subsidies, stable food prices, stable demand conditions, and a relatively stable ringgit, as well as gradual pass-through to consumer prices, should help keep inflation contained.
Meanwhile, the overnight policy rate is expected to remain unchanged at 2.75 per cent at the upcoming November Monetary Policy Committee meeting amid manageable inflation.
Moving forward, RHB Bank expects Bank Negara Malaysia to deliver a token 25 basis points (bps) hike in the first half of 2027 (1H 2027) as a normalisation move towards a more neutral policy setting rather than a response to significant inflationary pressures.
He also expects the 2026 fiscal deficit to remain broadly on track towards the government’s 3.5 per cent of GDP target, although risks are tilted towards a modest overshoot given the relatively high deficit in the first half of 2026 (1H 2026) and uncertainties surrounding fuel subsidy expenditure.
At the same time, the bank is maintaining its current account surplus forecast at 2.4 per cent of GDP for 2026, versus a 2.5 per cent surplus in 1H 2026.
"The goods surplus should remain supported by resilient E&E exports amid the global technology cycle, while robust tourism receipts and information and communication technology services exports should underpin the services account.
"Together, these should sustain Malaysia’s current account surplus," Gan said.
