Asia Economic Notes: Malaysia Trip Notes: Better placed to weather the storm

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Asia Economic Notes: Malaysia Trip Notes: Better placed to weather the storm

Deutsche Bank

Research

Asia Economics Date

Malaysia 12 May 2026

Asia Economic

Notes

Malaysia Trip Notes: Better placed to

weather the storm

Kaushik Das

We recently travelled to Malaysia, where we met a number of regulators and

Chief Economist

investors to discuss the macroeconomic outlook, against the backdrop of the +91-22-7180 4909

ongoing war and high global oil prices. Key takeaways:

* Growth: While some slowdown in momentum is widely anticipated from last

year’s strong growth of 5.2%yoy, we got an impression that regulators and market

participants are not overly worried about Malaysia’s near-term growth prospects.

Our 2026 growth forecast of 4.5%yoy seemed reasonable, which is likely to be

supported by slightly lower, but still robust domestic demand. In the latest

monetary policy meeting on 7th May, BNM also alluded to this, saying, “while

uncertainties surrounding the duration and severity of the Middle East conflict will

affect the outlook of domestic growth and inflation, nevertheless, Malaysia’s strong

fundamentals will continue to underpin the economy’s resilience.” Advance

estimates pegged 1Q’26 real GDP growth at 5.3%yoy and even with some

slowdown in the remaining quarters, Malaysia remains well poised to record

around 4.5%yoy growth in 2026.

While downside risks may arise due to a sharper-than-expected global slowdown

or/and a potential downturn in the tech cycle, thereby affecting Malaysia’s exports

momentum, there is also a possibility that growth surprises to the upside,

particularly in 2H’26, if there is a de-escalation of the conflict by June, thereby

helping to support stronger tourism activity. With oil prices remaining heavily