Bank Negara Raises 2026 Growth Forecast to 4-5% Amid Tensions

Kuala Lumpur, Malaysia – Bank Negara Malaysia raised its economic growth forecast for 2026 to 4 to 5 percent on Tuesday, citing robust domestic demand and investment as buffers against escalating tensions in the Middle East, even as oil prices have surged due to disruptions in the Strait of Hormuz.

The central bank's updated projection, detailed in its annual economic and monetary review for 2025, marks an increase from the government's earlier estimate of 4 to 4.5 percent set in October. Officials attributed the revision to stronger-than-expected performance in the second half of 2025, when gross domestic product expanded by 5.2 percent, surpassing initial targets amid record trade values and approved investments. "Malaysia enters 2026 from a position of strength," Bank Negara Governor Abdul Rasheed Ghaffour said at a news conference, noting that the forecasts already account for risks from the conflict involving Iran, which began on February 28.

The war has driven Brent crude prices to nearly $120 a barrel after Tehran restricted shipping through the Strait of Hormuz, a vital route for Asia's energy supplies. Bank Negara anticipates the average price will exceed $90 a barrel...