Malaysia's E&E exports sustaining 2H growth amid resilient global tech cycle — CGS International - The Edge Malaysia

MALAYSIA, 5 AUGUST 2026 —

KUALA LUMPUR (Aug 4): Malaysia's electrical and electronics (E&E) exports are expected to sustain their growth momentum in the second half of 2026, driven by the resilient global technology cycle, according to CGS International Securities Malaysia Sdn Bhd. The country's E&E exports have been supported by the global artificial intelligence (AI) investment cycle, despite recent corrections in technology stocks.

"What you are seeing in Malaysia's E&E exports today is essentially a reflection of what happened globally a few months ago," he said.

Ahmad Nazmi expressed optimism that Malaysia's technology sector will continue to perform well in the second half of 2026, barring a significant correction in global technology markets. He described such a correction as unlikely, adding that the momentum should continue into early next year as well. The continued investments in AI infrastructure globally are expected to sustain demand for Malaysia's semiconductor and electronics products, providing further support to exports over the coming months.

This is expected to have a positive impact on Malaysia's economy, with the technology sector being a significant contributor to the country's growth.

In addition to the strong E&E exports, Malaysia has also witnessed a notable turnaround in services exports. The services balance under the current account has posted surpluses for several consecutive quarters, after remaining in deficit for the past 15 years. This improvement is driven mainly by stronger travel and transportation receipts, reflecting a steady recovery in tourism and cross-border economic activities.

Ahmad Nazmi described this development as "very interesting", noting that the rebound is largely being driven by the travel and transport sectors.

The growth in services exports is expected to complement the strong E&E exports, supporting Malaysia's economic momentum in the second half of 2026. Ahmad Nazmi also emphasized the need for Malaysia to focus on ensuring that strong investment inflows, particularly in data centres, generate broader economic benefits beyond the construction phase. While data centres have emerged as a new engine of investment growth, he noted that the facilities themselves create relatively limited employment once operational.

As such, policymakers should focus on attracting AI-related regional headquarters and research centres, while encouraging greater participation by local suppliers in the data centre value chain to maximise spillover effects.

Looking ahead, Ahmad Nazmi expects greater clarity on Malaysia's investment landscape following the government's planned announcement of a new industrial roadmap later this year. The roadmap is expected to provide clearer direction on priority sectors and investment incentives, supporting investment momentum over the coming years. On domestic demand, Ahmad Nazmi described private consumption as resilient despite moderating from pre-pandemic levels.

Consumption growth has remained relatively modest, as wage increases have yet to fully catch up with rising living costs and education expenses, prompting households to become more cautious in their discretionary spending.

In terms of monetary policy, Ahmad Nazmi expects Bank Negara Malaysia (BNM) to keep the overnight policy rate (OPR) unchanged for the remainder of the year. He noted that the current pace of economic growth does not warrant tighter monetary policy, as inflationary pressures remain manageable. There is also little justification for a rate cut, given the economy's continued resilience.

The ringgit's outlook is expected to depend largely on the interest rate differential between Malaysia and the United States. Ahmad Nazmi forecasts the ringgit to trade around RM3.95 against the US dollar by year-end, with some volatility arising from external developments and domestic political uncertainty.

Overall, Malaysia's economy is expected to maintain its momentum in the second half of 2026, driven by the resilient global technology cycle and strong E&E exports. The growth in services exports and investment inflows is also expected to support the country's economic growth. While domestic demand remains modest, the overall outlook for Malaysia's economy remains positive, with the country well-positioned to benefit from the ongoing global technology cycle.

As Ahmad Nazmi noted, "Growth is being supported by exports and investments rather than an overheating domestic economy," suggesting that Malaysia's economy is on a stable growth trajectory.

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