Malaysia to hold off on growth upgrade on Middle East risks
Its central bank warned that “downside risks have risen”
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MALAYSIA’S second finance minister said policymakers will hold off on raising the country’s 2026 growth forecast as uncertainty over the Middle East conflict clouds the country’s economic outlook.
A month ago, Amir Hamzah Azizan had signalled optimism that the government could revise up its official growth projection of 4 per cent to 4.5 per cent when Bank Negara Malaysia next reviews the estimate. But officials are now taking a more cautious stance as geopolitical risks intensify.
“I think within the range of the forecast we have alluded to, we are in a safe zone,” Amir said in an interview with Bloomberg TV’s Haslinda Amin in Bangkok on Friday. “Whether we have room to grow against that, we have to wait and see how this pans out with the Middle East crisis.”
Malaysia surpassed its own economic growth estimates last year, overcoming challenges posed by US tariffs to emerge as one of the most resilient economies in Asia.
Gross domestic product rose 5.2 per cent in 2025 as it attracted record-high investments. Consumer demand is robust, partly thanks to low unemployment, while the global tech boom has lifted the nation’s exports and manufacturing.
The mood has now turned wary. Malaysia’s central bank warned on Thursday that “downside risks have risen,” even as it kept its key interest rate unchanged.
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“The biggest risk is how long this will go,” Amir said. “The key challenge is if this is a prolonged six months, nine months, 12 months, then everybody has to reassess again in terms of what we do.”
One potential cushion could come from stronger energy prices. Higher crude and liquefied natural gas prices would lift export earnings and support state-owned giant Petroliam Nasional Bhd.
“Malaysia is a net energy supplier in the global horizon,” Amir said. “That part of the supply chain is in very decent shape.”
The Malaysian ringgit, the top performing currency across Asia in the past 12 months, will stay resilient as the economy remains strong, Amir said. The currency is up 2.8 per cent this year, even after seeing its recent advances begin to reverse since the conflict involving the US, Israel and Iran started over the weekend.
“The fundamentals are still in our favour,” the minister said. “I hope cooler heads will prevail and we will come back to a lot more order in the world.” BLOOMBERG
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