Malaysia's E&E exports seen sustaining growth as AI cycle offsets tech pullback

MALAYSIA, 4 AUGUST 2026 —

Malaysia’s economic momentum is expected to hold through the second half of 2026, led by resilient technology exports despite recent volatility in global tech shares.

“What you are seeing in Malaysia's E&E exports today is essentially a reflection of what happened globally a few months ago,” he told reporters at The Invest Shariah 2026 conference on August 4. The event was co-hosted by Bursa Malaysia and CGS International Securities Malaysia.

Ahmad Nazmi said Malaysia’s technology sector should continue performing well through the second half of 2026 and into early 2027, provided there is no sharp correction in global technology markets. He described such a pullback as unlikely.

He pointed to sustained global AI infrastructure spending, which is expected to keep demand for Malaysian semiconductors and electronics elevated. The sector’s export momentum typically lags global tech cycles by several months, he noted.

Beyond merchandise trade, Malaysia is also seeing a recovery in services exports. The services balance under the current account has swung to surplus for several consecutive quarters after 15 years of deficit, driven by stronger travel and transportation receipts.

“This is a very interesting development because services have been in deficit for the past 15 years,” Ahmad Nazmi said. “The rebound is largely being driven by the travel and transport sectors.”

On investment, he urged policymakers to ensure that inflows into data centres translate into broader economic gains beyond construction. While data centres are a new driver of investment growth, their operational footprint creates relatively few jobs.

Ahmad Nazmi called for greater policy focus on attracting AI-related regional headquarters and research centres, and on deepening local participation in the data centre value chain to capture spillover benefits.

“The question is what happens after the data centres are completed,” he said. “The focus should be on creating downstream opportunities through AI activities and increasing local industry participation so that the benefits extend to the wider economy.”

A clearer investment roadmap is expected later this year. Ahmad Nazmi said the government’s planned industrial roadmap should provide sharper guidance on priority sectors and incentives, reinforcing investment momentum into 2027.

Domestic demand remains resilient but moderate. Private consumption growth has slowed from pre-pandemic levels as wage gains lag rising living and education costs, prompting households to tighten discretionary spending.

“Consumption is not weak, but it is moderate,” Ahmad Nazmi said. “Much of Malaysia’s current economic strength is being driven by exports and investments rather than domestic consumption.”

Against that backdrop, he expects Bank Negara Malaysia to keep the overnight policy rate (OPR) unchanged for the rest of 2026. The central bank held the OPR at 2.75% on July 9, 2026, following a 25-basis-point reduction in July 2025.

Ahmad Nazmi said BNM’s policy pause is justified as growth is supported by external demand rather than an overheating domestic economy. Inflationary pressures remain manageable, he added, giving little reason for a rate cut.

On the ringgit, he expects the currency to trade around RM3.95 to the US dollar by year-end, with volatility tied to interest-rate differentials between Malaysia and the United States. He anticipates both BNM and the US Federal Reserve to hold rates steady through 2026, with possible Fed easing next year.

“Overall, the ringgit is likely to remain range-bound, although periods of volatility should be expected as markets respond to global developments,” he said.

Related: CGS International · Malaysia