PIVB Keeps 2026 GDP Growth Forecast Unchanged At 4.6 Pct as Domestic Demand Supports Expansion
KUALA LUMPUR, May 18 (Bernama) -- Public Investment Bank Bhd (PIVB) has maintained its 2026 gross domestic product growth forecast at 4.6 per cent year-on-year (y-o-y), with domestic demand still anchoring the expansion.
The investment bank said the first quarter of 2026 (1Q 2026) outturn remains consistent with its view, although momentum has clearly normalised, with GDP easing to 5.4 per cent y-o-y from 6.2 per cent y-o-y in 4Q 2025 and turning broadly flat on a seasonally quarter-on-quarter basis.
“This is not yet a break in the growth cycle, but the buffer against external shocks has thinned,” it said in a note.
Last Friday, Bank Negara Malaysia (BNM) announced that Malaysia’s economy expanded by 5.4 per cent y-o-y in 1Q 2026, with the underlying growth mix remaining largely constructive and domestically anchored.
Hence, the central bank projects Malaysia’s growth at 4.0 per cent - 5.0 per cent y-o-y in 2026, supported by resilient domestic demand and continued export expansion, although the outlook remains increasingly exposed to external uncertainties.
Furthermore, the PIVB said the main risk has shifted from oil prices to supply continuity. The West Asia conflict is increasingly an input-cost and supply-chain shock, with pressure building across fuel, fertilisers, petrochemicals, logistics and other petroleum-based materials.
It noted that the Prime Minister’s economic adviser has warned that June could mark the point where shortages become more visible as firms run down inventories, raising the risk of reduced overtime, shift cuts and production disruptions.
“We still see enough offsets to keep our forecast unchanged. Household spending remains supported by low unemployment, wage growth and targeted policy measures, while investment activity continues to benefit from record approved-investment realisation, data centre-related capex, electrical and electronics (E&E) expansion, Johor-Singapore Special Economic Zone momentum and public project execution.
“The AI-led semiconductor cycle also provides a selective external cushion through E&E output, machinery demand and ICT-related services. However, these supports are conditional on supply constraints not extending materially beyond firms’ inventory buffers,” it said.
Meanwhile, the investment bank also maintained its overnight policy rate (OPR) call at 2.75 per cent through 2026 -- a rate move would require firmer evidence that cost pass-through is becoming broader, more persistent and less absorbable by firms.
For now, inflation risks have moved higher, but demand conditions are not excessive and price pressures remain uneven.
“BNM, therefore, is likely to stay on hold while preserving the option,” it added.
-- BERNAMA