Malaysia's Growth Set to Moderate in 2H

Dow Jones08-17 11:05

0305 GMT - Malaysia's 2H GDP growth is forecast to moderate to 4.3% from 5.7% in 1H, as economic expansion normalizes amid a less-favorable base and rising external headwinds, UOB economists Julia Goh and Loke Siew Ting say in a note. Growth is expected to remain supported by resilient domestic demand, AI- and data-center-related investment, and tourism, while manageable inflation should provide further support, they say. However, risks from Middle East tensions, ongoing disruptions to the Strait of Hormuz, evolving El Nino conditions and global market volatility could be key downside risks. UOB raises its 2026 GDP growth forecast to 5.0% from 4.5%, following stronger-than-expected 2Q growth. It expects Bank Negara Malaysia to keep its policy rate at 2.75%, while remaining vigilant to ongoing external developments.

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