Kuala lumpur: CIMB Treasury and Markets Research has revised its second-half 2026 (2H 2026) gross domestic product (GDP) forecast to 4.1 per cent and raised its full-year 2026 projection to 4.8 per cent from 4.3 per cent, tracking a stronger outturn in the second quarter (2Q) of 2026.

According to BERNAMA News Agency, the revision was driven primarily by the electrical and electronics (EandE) manufacturing outlook, which it now expects to expand 15.4 per cent year-on-year (y-o-y) in 2026. Despite this optimism, the research house anticipates overall growth to moderate to 4.1 per cent in 2H 2026, compared with 5.6 per cent in the first half, due to softer domestic demand and weaker domestic-oriented manufacturing counterbalancing the strength in export-oriented EandE.

CIMB Treasury and Markets Research also forecasted a deceleration in overall manufacturing growth, predicting it will ease to 6.1 per cent in 2H 2026 from 6.6 per cent in 1H 2026. Similarly, services growth is expected to moderate to 4.2 per cent from 5.5 per cent over the same period. The research house noted that the slowdown in services is partly due to less favourable base effects following the previous year's strong performance, although sequential growth should align with historical trends.

The research further highlighted that higher inflation might impact household spending towards the end of the year. Despite this, headline inflation is expected to average 2.6 per cent in 4Q 2026, driven mainly by cost-push factors. Underlying price pressures are anticipated to remain stable, with core inflation hovering around 2.2-2.3 per cent. In the absence of significant second-round effects, Bank Negara Malaysia is likely to continue its approach of looking through this temporary supply-driven inflation, the research house concluded.