Mideast War Tempers Malaysia Central Bank's Outlook for Economy in 2026

Malaysia's central bank remains cautiously optimistic about the economy, projecting a growth of 4% to 5% in 2026, despite uncertainties from the Middle East conflict. The bank highlights strong domestic spending and energy exports as resilience factors. However, rising global commodity prices and potential inflationary shocks pose risks. The central bank expects inflation to remain moderate at 1.5% to 2.5% this year, but warns that prolonged conflict could strain government finances and increase costs for consumers. Fuel subsidies may reach 4 billion ringgit monthly if oil prices rise significantly.