Emerging Insight: Malaysia – Fundamentals steady, but political developments to gain prominence

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Emerging Insight: Malaysia – Fundamentals steady, but political developments to gain prominence

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Emerging Insight

Malaysia – Fundamentals steady, but

political developments to gain prominence

Key takeaways 29 June 2026

GEM Fixed Income Strategy &• Despite a more hawkish Fed backdrop into 2H26, we still expect Malaysia's macro

Economics fundamentals to remain steady...

Global

• ...with BOP supported by commodities trade surplus & data-centre flows, and FX

reserve position stronger vs. past years. Kai Wei Ang

ASEAN Economist• That said, we keep an eye on political developments, amid the possibility of early Merrill Lynch (Singapore)

federal elections. +65 6678 5518

kaiwei.ang@bofa.com

Rahul Bajoria

By Kai Wei Ang & Rahul Bajoria IndiaBofAS&IndiaASEAN Economist

Exhibit 1: We see current account rising to 2.2% in 2026-27F vs 1-2% in 2023-25 +91 22 6632 3095

rahul.bajoria@bofa.com

Malaysia current account balance (% of GDP)

Claudio Irigoyen

5 Global Economist BofAS

claudio.irigoyen@bofa.com

4 David Hauner, CFA >> Global EM FI/FX Strategist

MLI (UK)

david.hauner@bofa.com

2 Glossary

CPO: Crude Palm Oil

LNG: Liquefied Natural Gas

0 NEER: Nominal Effective Exchange

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026F 2027F Rate

Source: BofA Global Research

BofA GLOBAL RESEARCH

Malaysia in Focus

Despite a more hawkish Fed backdrop into 2H26, we still expect Malaysia’s macro

fundamentals to remain broadly steady. We expect Balance of Payments (BOP) dynamics

to remain resilient, supported by possibly wider commodities trade surplus and data-

centre related flows. Meanwhile, net FX position has recovered strongly over the past

years. That said, given Malaysia’s highly political landscape, rising political uncertainty –