BNM governor says economy faces global risks from a position of strength, with domestic demand and reforms underpinning growth.
KUALA LUMPUR: Malaysia’s economy remains resilient despite rising global uncertainty from the escalating Middle East conflict, according to Bank Negara Malaysia.
Governor Datuk Abdul Rasheed Ghaffour said the situation is fluid and its duration and severity will determine the ultimate impact. He affirmed that Malaysia faces these challenges from a position of strength.
Being a small, open economy, Malaysia is exposed to such global risks. The central bank is closely monitoring developments, including oil prices, potential supply disruptions, and financial market volatility.
Crude oil prices have jumped by more than USD 10 within five days, hovering above USD 80 per barrel. Abdul Rasheed noted increased volatility in global financial markets, with many currencies including the ringgit affected.
The ringgit closed at 3.9415/9480 on Thursday. The governor expects to disclose the central bank’s detailed assessments later this month.
Nonetheless, Malaysia’s robust domestic growth, moderate inflation, sound financial system and resilient external sector will continue to support the economy. Abdul Rasheed said markets may react quickly to changing sentiments in the short term.
What is more important are Malaysia’s long-term fundamentals, which the markets will see. He stressed the importance of pressing on with reform measures to ensure the economy keeps growing.
Malaysia’s economy expanded 5.2% in 2025, driven by strong domestic demand, higher E&E exports and robust tourism activity. These growth drivers are expected to continue into 2026.
Domestic demand will remain the main anchor of economic expansion. Employment, wage growth and policy measures will stay supportive of household spending.
Investment activity is expected to remain firm, driven by multi-year and new small-scale projects. Malaysia will also continue benefiting from the E&E sector, given steady data centre development and technology growth.
Robust tourism activity from Visit Malaysia 2026 is expected to support local businesses. Meanwhile, Abdul Rasheed believes overall headline inflation will remain moderate this year.
In 2025, headline inflation stood at 1.4%, with core inflation at 2.0%. January 2026 data showed headline inflation at 1.6% and core inflation at 2.3%.
BNM’s Monetary Policy Committee decided to maintain the Overnight Policy Rate at 2.75%. Abdul Rasheed said this level remains appropriate and supportive of the economy.
The central bank will continue to monitor global and domestic growth developments. From a global inflation perspective, there could be potential impa
