MALAYSIA’S economy is projected to expand between 4.3 per cent and 4.5 per cent in 2026, underpinned by stronger household consumption, robust services sector activity and more stable domestic income formation, according to a new economic outlook report.
The projection is contained in the Economic Pulse 2026 report by IPPFA Sdn Bhd, which said growth momentum next year would be driven by two key structural catalysts: the 13th Malaysia Plan (RMK-13) and the Visit Malaysia 2026 campaign.
IPPFA said RMK-13 provides the country with a medium-term policy roadmap, focusing on digital infrastructure development, strengthening industrial capabilities and advancing the green transition agenda. Meanwhile, Visit Malaysia 2026 is expected to deliver an immediate boost to the services sector, particularly tourism, retail trade and domestic consumption.
“One of the main drivers of growth is Visit Malaysia 2026, which is estimated to inject between RM13 billion and RM21 billion into private consumption,” IPPFA said in a statement.
“This is equivalent to an increase of between 1.0 and 1.7 per cent in aggregate household spending power, with spillover effects extending beyond tourism into retail, transportation, food services and other domestic activities.”
IPPFA noted that the income effects are expected to be broad-based, benefiting service sector workers and small local enterprises rather than being concentrated among specific groups. Consumer spending patterns are also projected to improve in quality, supported by recurring income growth and a more stable labour market.
The report added that real household purchasing power is strengthening amid moderate inflation approaching 2 per cent, reducing exposure to interest rate and income shocks. This environment is expected to contribute to more stable and predictable wholesale and retail trade activity throughout 2026.
Meanwhile, Malaysia’s external trade performance continues to show strong momentum. The country’s export value reached RM1.45 trillion for the period from January to November this year, while total trade amounted to RM2.77 trillion over the same period.
Malaysia External Trade Development Corporation chairman Datuk Seri Reezal Merican Naina Merican said the figures marked the fifth consecutive year Malaysia has surpassed the trillion-ringgit trade threshold, placing the country on track to achieve a new full-year record.
“Compared with January to November last year, exports rose by nearly 6.1 per cent, trade increased by 5.8 per cent, and imports grew by about 5.6 per cent,” he said.
“Meanwhile, the country’s trade surplus for the same period was recorded at RM132.5 billion, an increase of 10.7 per cent, reflecting strong external trade performance,” he added when speaking to reporters.
Reezal Merican, who is also the Bertam state assemblyman, was met after attending a circumcision programme organised by his service centre and Umno Kepala Batas at a hotel.
He said export growth was largely driven by strong global demand for semiconductor products, which expanded by 17.5 per cent, pharmaceuticals, which rose by 22.9 per cent, and optical and scientific products, which increased by around 10 per cent.
Asia remained Malaysia’s largest export destination, followed by the United States, China, the European Union and Hong Kong, with these five markets accounting for nearly 68.5 per cent of total exports.
Trade with countries that have free trade agreements with Malaysia also posted positive growth, rising by 3.2 per cent and accounting for about 66.8 per cent of total export value. These markets include Mexico, Hong Kong, China, the United Arab Emirates, Chile, the United Kingdom and Canada.
“What is even more encouraging is the marked increase in exports to new and emerging markets, particularly in Africa and Central Asia,” Reezal said.
“Countries such as Yemen saw a 62 per cent rise, Tanzania 37 per cent, Togo 30 per cent, Uzbekistan 23 per cent, Kenya 12 per cent, Nigeria 15 per cent and Algeria 24 per cent.”
He added that Prime Minister Datuk Seri Anwar Ibrahim’s official visits to several African and Central Asian countries had contributed positively to trade performance, with those markets recording double-digit growth.
Reezal expressed confidence that Malaysia would register its highest export and trade values on record when full-year figures are released on January 19, ahead of MATRADE’s Malaysia Trade Performance Announcement on January 27.
“I expect this year will set another record, meaning we are quite optimistic that exports will not only break the trillion mark but reach the highest figures in Malaysia’s history. Last year, it was RM1.51 trillion, and the previous high was RM1.55 trillion in 2022.
“We are currently at RM1.45 trillion, and if we add another RM100 billion for this month, it will become RM1.55 trillion or RM1.56 trillion, surpassing the previous peak. The trade total of RM2.77 trillion will likely also be a record. Usually, this year’s figures will be known on January 19,” he said. - December 28, 2025
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