MARC Ratings raises growth forecast to 5.1% for Malaysia this year

KUALA LUMPUR (July 20): Malaysian Rating Corporation Bhd (MARC Ratings) has upgraded its 2026 gross domestic product (GDP) growth forecast for Malaysia to 5.1% from 4.4% previously. The rating agency has an upward bias should the strong GDP momentum be sustained in the third quarter of 2026, it said in a statement on Monday. “Global geopolitical uncertainties have effectively catalysed growth drivers in Malaysia, accelerating supply-chain investments and infrastructure development, boosting record-high inward tourism, and driving hydrocarbon exports,” MARC Ratings said. These tailwinds complement ongoing strength in foreign direct investment (FDI), the semiconductor and artificial intelligence investment upcycle, and resilient private consumption, it said. MRC Ratings added that Malaysia is expected to continue attracting foreign bond inflows in the second half of 2026 (2H2026), supported by stable domestic fundamentals and ongoing institutional reforms. However, a more hawkish US Federal Reserve (Fed) outlook may moderate the pace of inflows. Despite this, Malaysian Government Securities yields are expected to remain broadly stable within the 3.6% to 3.7% range by the end of 2026. On the monetary policy front, MARC Ratings’ baseline expectation is for the overnight policy rate (OPR) to remain unchanged. However, ongoing geopolitical risks could keep oil prices elevated and pressure inflation, the report said. “Additionally, amid strong GDP growth, a reversion to the OPR level that prevailed before the July 2025 pre-emptive rate cut may be considered over time,” it said. MRC Ratings also said the ringgit is expected to trade in the RM4.00-RM4.15 range by end-2026 versus the previous RM3.98-RM4.07 forecast before the Fed shifts its rate expectations. The revision reflects a wider Malaysian Government Securities-US Treasury yield differential in favour of the US. Nevertheless, it added that record-high exports and sustained FDI inflows should continue to support the currency. MARC Ratings said the ringgit was broadly stable in 1H2026 and was ranked as the second-best-performing currency among major Asian peers in 1H2026, trailing only the Chinese yuan. Uploaded by Tham Yek Lee