KUALA LUMPUR, July 20 - Malaysian Rating Corporation Bhd (MARC Ratings) has upgraded Malaysia’s 2026 gross domestic product (GDP) growth forecast to 5.1 per cent from 4.4 per cent previously.
It has an upward bias if the third quarter of 2026 (3Q 2026) GDP maintains its strong momentum.
“Global geopolitical uncertainties have effectively catalysed growth drivers in Malaysia, accelerating supply-chain investments and infrastructure development, boosting record-high inward tourism, and driving hydrocarbon exports,” MARC Ratings said in a statement today.
These tailwinds complement ongoing strength in foreign direct investment (FDI), the semiconductor and artificial intelligence investment upcycle, and resilient private consumption.
Malaysia is expected to continue attracting foreign bond inflows in the second half of 2026 (2H 2026), supported by stable domestic fundamentals and ongoing institutional reforms.
However, a more hawkish outlook from the United States Federal Reserve (US Fed) may moderate the pace of inflows. Despite this, Malaysian Government Securities yields are expected to remain broadly stable within the 3.60 per cent to 3.70 per cent range by the end of 2026.
On the monetary policy front, its baseline expectation is for the overnight policy rate to remain unchanged. However, ongoing geopolitical risks could keep oil prices elevated and pressure inflation.
“Additionally, amid strong GDP growth, a reversion to the OPR level that prevailed before the July 2025 pre-emptive rate cut may be considered over time,” MARC Ratings said.
It added that the ringgit is expected to trade in the RM4.00-RM4.15 range by the end of 2026, versus the previous RM3.98-RM4.07 forecast before the US Fed shifts its rate expectations.
The revision reflects a wider Malaysian Government Securities-US Treasury yield differential in favour of the US.
Nevertheless, the record-high exports and sustained FDI inflows should continue to support the currency.
It said the ringgit was broadly stable in 1H 2026 and ranked as the second-best-performing currency among major Asian peers, trailing only the Chinese yuan.
