MALAYSIA’S economy is now on a firmer trajectory towards more stable growth, underpinned by challenging structural reforms such as subsidy targeting, according to analysts.
Despite operating in an uncertain global environment, stable inflation, a controlled fiscal deficit and supportive monetary policy have combined to create what analysts describe as a robust economic shield for the domestic economy.
TA Securities projects that Malaysia’s gross domestic product will expand between 4.3 per cent and 4.7 per cent in 2026, driven by steady private consumption, continued cash assistance and favourable monetary conditions.
The firm noted that while external uncertainty could weigh on exports, Visit Malaysia Year 2026 is expected to provide an additional boost through strong multiplier effects across services and consumer spending.
Investment momentum is also expected to remain firm, extending the gains recorded in 2025.
“Higher approved investments, strong committed inflows and deeper bilateral economic relationships continue to position Malaysia as a regional investment hub, even against a more protectionist global backdrop,” TA Securities said in a research note.
On the external front, the research house said tariff-related risks have eased following the United States’ decision to reduce reciprocal tariffs. Malaysia has secured a final tariff reduction to 19 per cent, with discussions ongoing over exemptions for selected products.
“While certain sensitive sectors remain subject to national security provisions, the overall outcome is constructive for trade and investor sentiment,” it said.
TA Securities also expects Bank Negara Malaysia to maintain a moderately accommodative stance, balancing growth support against emerging inflationary risks. “We expect Bank Negara Malaysia to maintain a moderately accommodative stance, balancing growth support with emerging inflation risks,” it said.
On the currency, TA Securities noted that the ringgit has strengthened by more than nine per cent since the beginning of the year, trading at around RM4.09 against the US dollar.
The appreciation has been supported by a sustainable current account surplus, narrowing interest rate differentials with global peers and a weaker outlook for the US dollar.
The firm added that the potential appointment of a more rate-cut-inclined chair to replace US Federal Reserve chairman Jerome Powell in May 2026 has raised expectations of deeper monetary easing in the United States.
According to TA Securities, such a scenario could further support the ringgit, potentially strengthening it to below the RM4 level against the US dollar.
However, it cautioned that the US Congressional elections on 3 November 2026 could inject additional volatility, particularly if Republicans were to secure a stronger mandate in both chambers, reinforcing President Donald Trump’s hardline trade stance and aggressive foreign policy.
Nevertheless, TA Securities described this outcome as unlikely given growing domestic opposition to Trump’s policies.
“Our base case expectation is for Republicans to retain control of the Senate while losing their majority in the House,” it said. - December 17, 2025
