Malaysia’s Economy Likely To Grow 4.7 Pct In 3Q, Supported By Domestic Demand - TA Securities
By Nurunnasihah Ahmad Rashid
KUALA LUMPUR, Oct 15 (Bernama) -- Malaysia’s economy is expected to expand by 4.7 per cent in the third quarter of 2026, supported by domestic consumption, investment and manufacturing activity, according to TA Securities.
Its chief economist Shazma Juliana Abu Bakar said the anticipated moderation from the strong second-quarter growth of 6.0 per cent reflected a gradual normalisation after the stronger first half performance, rather than a sign that the economy was losing steam.
“Growth of above 4.5 per cent would still represent a healthy expansion, supported by domestic consumption, investment and manufacturing activity.
“A slower growth rate simply means the economy is expanding at a more moderate pace; it does not mean economic activity is contracting,” she told Bernama ahead of the Department of Statistics Malaysia’s release of the third-quarter advance gross domestic product (GDP) estimates tomorrow.
Shazma Juliana remains comfortable with its full-year GDP growth forecast of 5.1 per cent, with fourth-quarter growth projected at 4.6 per cent.
She said industrial activity was likely to moderate, particularly as mining activity softened and domestic spending returned to a more sustainable pace.
While September’s manufacturing Purchasing Managers’ Index of 49.9 pointed to some loss of momentum, the reading did not necessarily signal a sharp deterioration in manufacturing, she added.
“We are looking at a moderation in growth rather than a significant downturn in economic activity,” the economist said.
Domestic demand provides important buffer
Shazma Juliana said domestic demand remained an important buffer for the economy, while manufacturing and trade continued to be important growth drivers despite an expected moderation from the exceptionally strong rates recorded earlier.
“The key external risks include softer demand from major trading partners such as the United States, Singapore and China.
“Malaysia’s export performance will also depend on demand for semiconductors and other technology products, as well as growth in alternative markets,” she said.
However, assessing the economy’s underlying strength also required a distinction between gross exports and their actual contribution to GDP.
“Manufacturing relies on imported inputs, so strong export growth does not translate one-for-one into domestic value added. This is why we also look at net trade and domestic value added when assessing the economy’s underlying strength,” she said.
On the fiscal outlook, Shazma Juliana said a modest slowdown would not automatically derail Budget 2027’s revenue projections as government revenue depended on more than GDP growth alone.
Corporate profitability, household incomes, commodity prices and tax collection efficiency also mattered, she said.
“The government is targeting revenue of RM380.8 billion in 2027, compared with RM363.6 billion in 2026.
“Achieving that target could become more challenging if economic growth and corporate profits consistently fall short of expectations,” she said.
OPR expected to remain at 2.75 pct
Meanwhile, she said TA Securities expects Bank Negara Malaysia (BNM) to maintain the Overnight Policy Rate (OPR) at 2.75 per cent at its Monetary Policy Committee meeting in November.
“A moderation in growth, alongside manageable underlying inflation, would support keeping monetary policy unchanged.
“A softer third-quarter GDP reading alone would probably not be sufficient to justify a rate cut,” she said.
She said BNM would need to assess whether the weakness is persistent and spreading across domestic demand, employment and other parts of the economy.
-- BERNAMA