Malaysia's Economy To Expand 4.3-4.5 Pct In 2026, Driven By Domestic Demand -- IPPFA
KUALA LUMPUR, Dec 23 (Bernama) -- Malaysia’s economy is projected to expand between 4.3 per cent and 4.5 per cent in 2026, reflecting a decisive shift toward growth that is increasingly supported by household consumption, services activity and internal income formation.
According to IPPFA Sdn Bhd’s 2026 Economic Pulse report released today, much of this momentum stems from two structural catalysts that will shape the trajectory of the coming year, namely the 13th Malaysia Plan (13MP) and Visit Malaysia 2026 (VM2026).
It said 13MP provides medium-term direction by prioritising digital infrastructure, industrial upgrading and the green transition, while VM2026 delivers an immediate uplift to services, tourism and consumption.
“A central upside identified in the outlook is the VM2026 campaign, which IPPFA estimates could inject between RM13 billion and RM21 billion into private consumption, translating into a 1.0-1.7 per cent uplift in aggregate household spending power, with spillover effects extending beyond tourism into retail, transport, food services and other domestic-facing activities.
“The income impact is expected to be broad-based, supporting service-sector workers and small local enterprises rather than being concentrated in a narrow segment,” IPPFA said in a statement.
Importantly, IPPFA highlights a qualitative improvement in consumption dynamics, whereby consumer spending is increasingly being supported by recurring income growth and labour market stability, rather than temporary fiscal measures, savings drawdowns or rapid credit expansion.
With headline inflation moderating toward two per cent, real purchasing power has stabilised, contributing to more predictable wholesale and retail trade activity and reducing household exposure to interest rate and income shocks, it added.
On currency, IPPFA expects the ringgit to strengthen toward RM4.05 per US dollar by end-2026, supported by improving external balances, sustained capital inflows and clearer policy signalling.
“Greater currency stability has helped contain imported inflation pressures and restore confidence, with the exchange rate increasingly reflecting underlying fundamentals rather than short-term risk aversion,” it said.
Meanwhile, on the external front, the report underscores Malaysia’s strategic repositioning amid global trade fragmentation, with export growth expanding into non-traditional markets, including Mexico, Cambodia and Kenya, reflecting firms’ adaptation to new supply-chain routes.
“The Malaysia-United States (US) Reciprocal Trade Agreement is identified as a stabilising anchor, with bilateral trade projected to reach US$105.1 billion by 2028 under IPPFA’s baseline scenario.
“Looking ahead, IPPFA concludes that as the US economy moderates and policy uncertainty persists, Asia will remain the primary anchor of global growth, while Malaysia’s ability to sustain momentum will depend less on external conditions and more on execution,” it said.
-- BERNAMA