Malaysia's economy seen hitting upper end of 2024 growth target
Malaysia’s economy is expected to grow at the upper end of the 4%-5% official forecast for this year, Bank Negara Malaysia governor Rasheed Ghaffour said on Tuesday.
Source: Free Malaysia Today · The Edge Malaysia · July 28, 2026 at 12:20 PM · AI-assisted report
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KUALA LUMPUR, 28 JULY 2026 —
Malaysia’s economy is expected to grow at the upper end of the 4%-5% official forecast for this year, Bank Negara Malaysia governor Rasheed Ghaffour said on Tuesday.
Market Impact
“The medium term outlook remains favourable,” Rasheed told the central bank’s annual symposium. “We remain well on track to grow by between 4% to 5%, likely towards the upper end of the range, with manageable inflation.”
Gross domestic product rose 5.8% in the second quarter from a year earlier, beating the first-quarter expansion of 5.4% and the median estimate among analysts, according to advance estimates. The acceleration reflected continued strength in investment, particularly in artificial intelligence-related projects, alongside steady domestic consumption.
Policymakers have reiterated confidence in meeting the 4%-5% growth target for 2026 despite regional trade tensions and geopolitical risks, Rasheed said. As a net energy exporter, Malaysia faces less exposure than neighbors such as the Philippines to supply disruptions from the Middle East conflict, helping cushion the blow from higher global oil prices.
Inflation has stayed subdued, easing to 1.9% in June. Analysts attribute the moderation to fuel subsidies that have softened the impact of rising crude prices. The central bank has kept its benchmark interest rate unchanged at 2.75% since last July, a stance Rasheed said aligns with the domestic growth and inflation outlook.
“We will continue to do what is needed to maintain price stability in a manner that supports sustainable economic growth,” he told the symposium. The governor’s remarks follow data showing the services sector expanded 6.1% in the second quarter, driven by tourism and retail activity, while manufacturing grew 5.4%, supported by electronics production.
Rasheed warned that “inflationary pressures could re-emerge if global commodity prices spike further or if supply chain frictions intensify.” He added that the central bank stands ready to adjust policy if needed to keep inflation within the 2%-3% target range.
Investors are watching whether Malaysia can sustain one of Southeast Asia’s fastest expansions this year. Analysts at Maybank Investment Banking Group recently raised their 2024 growth forecast to 5%, citing stronger-than-expected second-quarter data and continued foreign direct investment in high-tech manufacturing.
The construction sector grew 4.8% in the second quarter, reflecting ongoing infrastructure projects. With the policy rate held steady since July 2023, financial markets expect the next move to be a hike rather than a cut if inflation drifts toward the upper end of the target range.
Analysts at RHB Bank Bhd noted that the central bank’s cautious tone leaves room for gradual tightening if price pressures build. For 2024, the government has pencilled in growth of 4% to 5%, an outlook Rasheed said is achievable given the economy’s underlying momentum.
The central bank will release its next quarterly economic projection in late August, which may provide further clarity on the balance of risks.
Related: Bank Negara Malaysia (BNM)