HSBC Private Bank projects that Malaysia will sustain robust economic growth in 2026, even as it faces near-term risks from global uncertainty.

According to investment strategist Abhilash Narayan, the outlook is supported by resilient domestic consumption, ongoing investment in infrastructure and data centres, and a rebound in tourism, all of which are expected to underpin growth this year.

In its Q2 2026 investment outlook, HSBC Private Bank estimates Malaysia’s real GDP will expand by 4.5%, a slight easing from the 4.9% growth recorded in 2025.

“Elevated energy prices and Middle East conflict present near-term headwinds. However, Malaysia's policy responses, including targeted subsidies and pricing controls, cushion economic impacts,” Abhilash said in a statement.

“Policy flexibility and medium-term regional growth prospects remain constructive.”

He went on to add that inflation has been edging higher on the back of firm domestic demand, although subdued wage pressures should help keep price increases under control, New Straits Times reports.

Moreover, he also noted that Bank Negara Malaysia is expected to hold interest rates steady at 2.75% in 2026, unless there is a sharp surge in oil prices.

On the Ringgit, Abhilash said it has been among Asia’s top-performing currencies against the US Dollar this year, supported by corporate foreign exchange repatriation, a current account surplus, and a strong pipeline of foreign direct investment.

“However, as a result of the recent outperformance, the Ringgit is somewhat expensive relative to fundamentals.

“Hence, we hold a neutral view on the currency over the next six months as the pace of appreciation could slow down. We expect the Ringgit to edge towards 3.85 against the US Dollar by end-2026,” he said.

Abhilash added that Malaysian equities are currently valued at about 14.8 times forward earnings, broadly in line with their five-year average. He also said that corporate profits are expected to grow by nearly 9% in 2026.

“We are neutral on Malaysian equities over the next six months despite the strong economic outlook, as growth areas such as electronics, chips and data centres have limited representation in the stock index,” he stated.

HSBC Private Bank’s Q2 2026 investment outlook, ‘Changing Narratives, Continued Opportunity’, highlights that the resilience of the global economy continues to generate growth opportunities, enabling investors to stay invested while reinforcing portfolio resilience amid geopolitical shifts.