Malaysia’s economy remains resilient despite a challenging external environment marked by rising trade protectionism and geopolitical tensions. Led by robust domestic demand and strong electronics exports, growth is expected to stay firm, moderating in 2026 before stabilizing near its potential in 2027. Risks to this outlook are tilted to the downside, reflecting external uncertainties such as heightened geopolitical conflict, renewed trade tensions, and a cooling of the artificial intelligence boom.
Looking ahead, growth is expected to remain firm, though it may moderate amid external headwinds. Growth is projected to ease to 4.6 percent in 2026, reflecting the full-year impact of higher tariffs and lingering global trade uncertainties that temper export growth and business sentiment, before improving to 4.7 percent in 2027.