Summary

• Ending 2025, global growth remained resilient. Major economies have avoided recession, supported by services activity and accommodative interest rates, but growth momentum remains capped by labour supply limitations and demographic trends. The global economy is expected to see moderate growth in 2026, though shifts in monetary policy, trade dynamics, and geopolitical developments will remain key risks to capital flows and market conditions.
• MARC Ratings forecasts Malaysia’s economy to grow 4.3% in 2026. Growth is expected to be supported by resilient domestic demand and sustained investment, underpinned by moderate inflation and steady income growth. On the external front, improving demand following reduced trade uncertainties and rising exports driven by artificial-intelligence (AI) adoption are likely to further bolster the economy.
• MARC Ratings expects the ringgit to appreciate to around 3.93 USDMYR by mid-2026, supported by steady foreign portfolio inflows, subdued inflation levels, an improving Malaysian Government Securities – US Treasuries (MGS-UST) spread in Malaysia’s favour, and firmer external sentiment. By the end of 2025, the ringgit rallied 10.1% against the greenback, securing its position as Asia’s best-performing currency.
• Malaysia is expected to sustain steady foreign portfolio inflows, supported by resilient domestic fundamentals, institutional reforms and ongoing fiscal consolidation, with the fiscal deficit projected at 3.5% of gross domestic product (GDP) in 2026 (2025: 3.8%). Malaysia is also well positioned to capture export gains and attract capital inflows from the global AI capex cycle. MARC Ratings projects the 10 year MGS yield to anchor at 3.35%–3.40% by end 2026.