PublicInvest Raises 2026 GDP Growth Forecast To 5.4 Pct On Strong 2Q Results
KUALA LUMPUR, Aug 17 (Bernama) -- Malaysia’s stronger-than-expected second quarter (2Q) economic growth has prompted Public Investment Bank Bhd (PublicInvest) to raise its 2026 gross domestic product (GDP) forecast to 5.4 per cent year-on-year (y-o-y) from 4.6 per cent.
In a note today, PublicInvest said this follows the six per cent y-o-y expansion in 2Q 2026, which lifted the first half of 2026’s (1H 2026) growth to 5.7 per cent y-o-y.
It said the 2.5 per cent quarter-on-quarter seasonally adjusted expansion also points to firmer sequential momentum entering 2H 2026.
“We now expect growth to remain relatively firm at around 5.1 per cent y-o-y in 2H 2026, supported by resilient domestic demand, continued investment execution and sustained technology-related activity.
It said domestic demand should remain the main growth anchor, with household spending continuing to benefit from steady income growth, low unemployment and policy support.
“The moderation in private investment in 2Q 2026 also did not signal a material weakening in the investment cycle, as continued spending on structures, machinery and equipment pointed to ongoing project execution,” it added.
On external demand, PublicInvest said semiconductor demand remained firm, with continued artificial intelligence (AI)-related spending supporting Malaysia’s electrical and electronics (E&E) production chain.
At the same time, liquefied natural gas (LNG), refined petroleum products and information and communications technology services should provide some offset as the broader external impulse normalises.
However, PublicInvest expects external contributions to ease in 2H 2026 as earlier shipment frontloading unwinds and global trade growth softens, with US trade measures and prolonged West Asia disruptions remaining the main downside risks.
“Our 5.4 per cent forecast sits above Bank Negara Malaysia’s (BNM) four per cent to five per cent range, as we expect the moderation in 2H26 to be more measured than implied by the official forecast.
“A sharper correction in external demand, particularly if accompanied by weaker domestic spending or broader cost pass-through, would pose the main downside risk, and conversely, stronger E&E demand and faster investment realisation could push growth higher,” it said.
In a separate note, Apex Securities Bhd maintained its full-year 2026 GDP growth forecast at five per cent, at the upper end of BNM’s official forecast range, following its recent upward revision from 4.7 per cent.
Nevertheless, the securities firm said the stronger-than-expected 6.0 per cent growth in 2Q 2026 has further tilted the balance of risks to the upside, with full-year growth potentially reaching 5.1-5.5 per cent if strong momentum is sustained amid continued strength in E&E exports and AI-related investment.
“That said, our 2026 GDP forecast of five per cent y-o-y implies growth moderating to 4.4 per cent in 2H 2026, partly reflecting a high base effect from strong 2H 2025 growth.
“More importantly, the drag from West Asia tensions may become more visible in 2H 2026 as the risk shifts from supply disruption to persistent cost pressures, which could increasingly weigh on production and investment,” it added.
-- BERNAMA