01/04/2026

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WEDNESDAY | APR 1, 2026

BNM projects Malaysia’s 2026 growth at 4% to 5%

Ű BY HAYATUN RAZAK sunbiz@thesundaily.com

KUALA LUMPUR: Bank Negara Malaysia (BNM) expects Malaysia’s economy to grow between 4% and 5% in 2026, supported by strong funda mentals despite global uncertainties. Governor Datuk Seri Abdul Rasheed Ghaffour said growth will be underpinned by strong domestic demand, supported by stable employment and income conditions, while external risks are cushioned by Malaysia’s diversified export base, firm semiconductor demand, tourism recovery and energy exports. “Even under such scenarios, including the Middle East crisis, the baseline of the economy is able to cushion the impact,” he told reporters at the Bank Negara Malaysia Annual Dialogue yesterday. BNM’s outlook is based on a baseline scenario of a short-lived conflict lasting one to two months, with oil prices ranging between US$70 and US$90 (RM283 and RM364) per barrel. It also factors in an adverse scenario of a more prolonged disruption lasting three to six months, in which oil prices could rise to between US$90 and US$110. Under a tail-risk scenario in which the conflict extends beyond six months and causes severe supply disruptions, oil prices could exceed US$110, potentially prompting a revision to Malaysia’s growth outlook. Abdul Rasheed said BNM has incorporated these scenarios into its assessment, based on the conflict’s duration and severity and its impact on oil prices. “We look at the extent of disruption and how long this conflict will last. Our baseline assumes one to two months, the adverse scenario three to six months, and the tail-risk scenario beyond six months.” He said household consumption remains a key anchor of growth, supported by positive income prospects and a firm labour market, with un employment expected to remain near its decade-low of around 2.9%, alongside targeted policy support. Investment approvals rose to RM427 billion in 2025, with manufacturing project implementation rates at about 85%, reflecting strong execution and continued private sector capacity expansion led by information tech nology and electrical and electronics, as well as progress in national masterplans and public infrastructure. He said real export growth is expected to moderate to 2.8% amid

Adnan Zaylani Mohamad Zahid said the ringgit is expected to remain resilient, underpinned by strong fundamentals built over the past two to three years. He said this is reflected in an active foreign exchange market with strong liquidity, allowing businesses to transact smoothly. BNM will continue its engagement efforts, including encouraging com panies to repatriate earnings, convert proceeds into ringgit, and promote its use as an operating currency, es pecially among multinational com panies. He added that new engagement initiatives aim to bridge gaps between the financial sector and the real economy, involving industries such as shipping, aviation and electrical and electronics. “These efforts will strengthen financial intermediation and

outlook remains positive this year, supported by Malaysia’s strong eco nomic fundamentals and movements in the US dollar. He said the country’s current account surplus and ongoing reforms will continue to support the local currency, alongside efforts to en courage the repatriation and con version of export proceeds and investment income into ringgit. However, he noted that the ongoing conflict in West Asia may have a temporary impact on the ringgit, largely driven by sen timent. “More importantly, it is the strength of the fundamentals built over time. In the long term, investors will assess these developments,” he added. Abdul Rasheed said healthy capital inflows have returned, particularly into financial markets, supported by a more diversified investor base and renewed interest from overseas investors. Meanwhile, deputy governor

o Bank Negara cites strong domestic fundamentals, says external risks cushioned by diversified export base, firm semiconductor demand and tourism recovery, among others

external uncertainties, but Malaysia’s diversified export base – with no single country accounting for more than 16% of exports – and strong positioning in the global technology cycle, including artificial intelligence driven demand, will provide support. Tourism remains a key growth driver, having turned the services account into a surplus, with mo mentum expected to continue under Visit Malaysia 2026, although developments in the Middle East pose downside risks. On inflation, Abdul Rasheed said headline inflation is projected at 1.5% to 2.5% in 2026. “While global cost conditions re

main uncertain, underlying inflation is expected to stay stable, supported by steady domestic demand, with policy measures helping to limit the pass through of global cost pressures.” Malaysia enters this period from a position of strength, supported by robust domestic demand, moderate inflation and a resilient financial system. The economy grew 5.2% in 2025, anchored by resilient domestic demand, with household spending supported by a firm labour market and targeted policy measures. Inflation averaged 1.4% in 2025, the lowest in five years, although cost of-living pressures remain a concern. The governor said the ringgit’s

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support industry, and will continue through out the year,” he said.

Abdul Rasheed (third, right) speaking at the Bank Negara Malaysia Annual Dia;ogue in Kuala Lumpur yesterday. – BERNAMAPIC

Central bank declares RM5b dividend for FY25 despite lower earnings KUALA LUMPUR: Bank Negara Malaysia (BNM) has declared a dividend of RM5 billion to the government for the financial year ended Dec 31, 2025 (FY25), a second consecutive year of strong payouts despite a 5.7% decline in earnings. The payout follows a record RM5.25 billion dividend in 2024 and matches the RM5 billion distributed in 2021. associated with managing its reserves portfolio and conducting monetary operations. Governor Datuk Seri Abdul Rasheed Ghaffour said the marginal decline reflects the increasingly dynamic global financial market environment, given BNM’s role in managing the country’s international reserves, which are exposed to external uncertainties. Negara Malaysia Annual Dialogue press conference yesterday. The remaining RM7.45 billion of net profit was transferred to the central bank’s risk reserve, which rose to RM155.31 billion at end-2025 from RM147.90 billion a year earlier. foreign currency assets.” International reserves continued to make up the bulk of the central bank’s assets at RM509.79 billion, accounting for the majority of total assets, compared with RM520.13 billion in 2024. BNM emphasised that it does not rely on government funding for its day-to-day operations, instead generating income from investing the country’s international reserves. slightly higher than RM41 million in the previous year. Total assets stood at RM602.22 billion as at end-December 2025, down 3.1% from RM621.54 billion a year earlier, mainly due to currency translation effects following the strengthening of the ringgit. Liabilities declined 6% to

The risk reserve serves as a financial buffer comprising cumulative retained profits, unrealised foreign exchange translation gains or losses, and fair value changes from securities. “As 85% of assets are deno minated in foreign currency, it is important for us to build adequate risk reserves to allow for a cushion against financial market volatility and exchange rate fluctuations in the

RM405.47 billion from RM431.47 billion previously, largely comprising currency in circulation amounting to RM177.75 billion and deposits by financial institutions of RM118.06 billion. The General Reserve Fund remained stable at RM28.888 billion. - by HAYATUN RAZAK

“However, this represents a slight decline from the net profit of RM13.16 billion and income of RM14.98 billion recorded in the previous year. The marginal decline is in line with the dynamic global financial market environment,” he said at the Bank

BNM recorded a net profit after tax of RM12.45 billion in FY25, compared with RM13.16 billion in the previous year, on the back of a lower total income of RM14.35 billion versus RM14.98 billion previously. The income figure is net of costs

For FY25, the central bank recorded total expenses of RM1.86 billion, comprising RM1.706 billion in operating expenditure and RM150 million in development spending. It also paid RM42 million in taxes,