Can US tariffs slow Malaysia's economic growth streak and 2026 projections?
Malaysia’s economy grew by 5.2 per cent in 2025, beating official forecasts, marking its strongest full-year performance since 2022.
The expansion was driven by steady domestic demand, stronger exports and robust investment, particularly in data centres and technology-related sectors.
However, projections into the country’s economic performance in 2026 are being haunted by uncertainty over US trade policy, which is emerging as a key risk.
Malaysia currently faces a 19 per cent tariff on goods exported to the United States. While recent US semiconductor tariffs were narrower than initially feared, affecting less than 10 per cent of related exports.
Bank Negara Malaysia has projected economic growth of between 4 and 4.5 per cent in 2026, slightly slower than in 2025. The central bank kept its benchmark interest rate unchanged at 2.75 per cent, citing stable inflation and steady economic momentum.
Household spending remains strong, supported by wage growth and a healthy labour market. Investment is also holding up, backed by ongoing infrastructure projects and private sector expansion.
This story is written and edited by the Global South World team, you can contact us here.
