KUALA LUMPUR, 9 January 2026 — Affin Bank Bhd has forecast Malaysia’s economy to expand by 4.3% in 2026, driven by resilient domestic demand, robust investment activity, and a sustained recovery in external sectors, reinforcing expectations that the country will maintain solid growth momentum amid a cautiously improving global economy.
In its latest economic outlook report, the bank noted that Malaysia’s economic expansion is expected to be underpinned by private consumption, business investment and exports, even as external uncertainties persist. Affin Bank highlighted that positive policy support, stable labour market conditions and targeted government spending will continue to reinforce growth prospects throughout the year.
Domestic Demand Remains a Growth Pillar
Affin Bank’s economists said that household spending is projected to remain a key contributor to GDP growth, supported by wage gains, firm employment levels and continued social spending measures. Consumer confidence, though moderate, is expected to improve gradually with the pickup in services and retail activity, particularly in urban centres.
“Private consumption will continue to be the backbone of Malaysia’s growth,” the report stated, pointing to stable income trends and a broadening of economic activities that support spending on goods and services.
Investment and External Sector Outlook
Investment activity, both public and private, is also expected to be a meaningful growth driver. Infrastructure projects, digital transformation initiatives and capacity expansions in manufacturing and services are anticipated to sustain business spending. Additionally, targeted policy measures aimed at enhancing productivity and enhancing the investment climate could further bolster capital formation.
On the external front, Malaysia’s export performance is forecast to remain resilient, although moderated by slower global growth and subdued electronics demand, sectors where Malaysia has strong trade linkages. Affin Bank highlighted that commodity exports and value-added manufacturing exports will help cushion external sector pressures.
Risks and Policy Considerations
Despite the optimistic headline projection, Affin Bank noted several downside risks that could temper growth, including persistent geopolitical tensions, tighter global financial conditions and potential slowdowns in key trading partners’ economies. Inflation dynamics and monetary policy responses in major economies such as the United States will remain important influences on capital flows and exchange rate movements.
In its outlook, the bank emphasised the importance of prudent macroeconomic management and continued structural reforms to support long-term growth sustainability — including measures to enhance labour productivity, encourage foreign direct investment, and strengthen digital and green economy frameworks.
Malaysia’s Growth Trajectory
Malaysia’s economy expanded by 4.0% in 2025, driven by renewed activity in services, consumption and investment after several years of global economic headwinds. The 4.3% projection for 2026 signals continued confidence that the Malaysian domestic economy can weather external volatility while maintaining robust internal dynamics.
Affin Bank’s forecast aligns with other independent projections that anticipate steady, above-trend economic growth for Malaysia, underpinned by competitive fundamentals and supportive policy settings.
