Kuala lumpur: MBSB Investment Bank Bhd (MBSB IB) has announced an upward revision of its 2026 gross domestic product (GDP) growth forecast to 4.5 per cent. The adjustment reflects steady economic growth and well-contained inflation, which are expected to allow the central bank to keep the Overnight Policy Rate (OPR) unchanged at 2.75 per cent, facilitating a prolonged rate pause.
According to BERNAMA News Agency, MBSB IB's revised GDP forecast surpasses its previous estimation of 4.2 per cent, despite anticipating a moderation from the 5.2 per cent expansion observed in 2025. This forecast aligns with Bank Negara Malaysia's (BNM) projected GDP growth range of 4.0 to 5.0 per cent for 2026. MBSB IB also noted that the worst-case scenario stemming from the West Asia conflict seems to have subsided.
The investment bank highlighted that the forecast revision captures stronger-than-expected momentum in the first half of the year, driven by a recent surge in export performance and steady domestic demand. Malaysia's robust domestic fundamentals continue to support its resilience against external market volatility. However, the national growth trajectory remains vulnerable to geopolitical risks and external uncertainties.
Beyond geopolitical tensions, MBSB IB cautioned that higher tariffs imposed by the United States might pose downside risks to external trade. Meanwhile, RHB Investment Bank Bhd (RHB IB) echoed MBSB IB's sentiment, expecting the OPR to remain unchanged at 2.75 per cent throughout 2026. RHB IB noted that monetary policy will likely remain data-dependent in upcoming Monetary Policy Committee (MPC) meetings, guided by economic growth and underlying inflation trends.
RHB IB stated that resilient economic fundamentals and manageable inflationary pressures support a stable policy stance, with no immediate need for adjustments. However, lingering uncertainties around geopolitical tensions and potential disruptions in global oil supply could exert upward pressure on energy prices. RHB IB warned that if inflation exceeds the official forecast range of 1.5 to 2.5 per cent, a 25-basis point rate hike could not be entirely ruled out.
OCBC Bank added that BNM's assessment of economic growth reflects greater confidence, considering strong incoming activity data. BNM noted resilient growth in the second quarter, driven by sustained domestic demand and stronger-than-expected export performance. May's industrial production growth, reported at 8.4 per cent year-on-year, further corroborates this assessment, with average growth for April and May at 8.3 per cent year-on-year compared to 4.0 per cent in the first quarter of 2026.