Malaysian economy on track for 4% to 5% growth, central bank governor says

Bank Negara Malaysia governor Rasheed Ghaffour said the central bank will continue to do what is needed to maintain price stability in a manner that supports sustainable economic growth. (Bernama pic)KUALA LUMPUR: Malaysia’s economy is poised to grow at the upper end of the 4%-5% official forecast for this year, according to the central bank chief.“The medium term outlook remains favorable” and growth is expected to stay firm, Bank Negara Malaysia governor Rasheed Ghaffour said Tuesday at the central bank’s annual symposium. “We remain well on track to grow by between 4% to 5%, maybe likely towards the upper end of the range, with manageable inflation,” he said.The governor’s assessment comes as investors gauge whether Malaysia can sustain one of Southeast Asia’s fastest growth rates after weathering the fallout from the conflict in the Middle East and global trade tensions.

A boom in artificial intelligence-related investment, resilient electronics exports and robust domestic demand have helped cushion the economy against external shocks, even as policymakers remain alert to inflationary pressures and weaker global growth.Gross domestic product rose 5.8% in the three months through June from a year earlier, according to the country’s advance estimates, beating first-quarter expansion of 5.4% and analysts’ median estimate. Policymakers, including Rasheed, have said Malaysia remains confident of achieving its goal of 4%-5% growth in 2026 despite the US war with Iran.As an energy-producing country, Malaysia has less dependence on oil and gas imports than neighbors like the Philippines, giving it a crucial buffer in the face of the war in Iran. Price pressures have remained contained, with inflation easing to 1.9% in June, helped by fuel subsidies that have cushioned the impact of higher global crude prices.

Resilient economic growth and subdued inflation have given BNM room to leave its benchmark interest rate unchanged since cutting it to 2.75% in July last year.The current monetary policy stance remains in line with domestic growth and inflation outlook, Rasheed said. The central bank “will continue to do what is needed to maintain price stability in a manner that supports sustainable economic growth,” he added.