Malaysia raises 2026 growth forecast despite Iran war risks

The revised forecast from Bank Negara Malaysia marks an upgrade from the government’s earlier target of 4 to 4.5 per cent, reflecting stronger-than-expected momentum in the second half of last year and resilient domestic demand.

“Malaysia enters 2026 from a position of strength to navigate the challenges,” BNM Governor Abdul Rasheed Ghaffour told a news conference on Tuesday, adding that the bank’s projections had already factored in risks stemming from the conflict in Iran.

Across Southeast Asia, governments have spent billions of dollars in recent weeks trying to contain inflation as oil prices surged following disruptions linked to the war.

Crude prices have spiked to nearly US$120 a barrel after Tehran imposed severe restrictions on traffic through the Strait of Hormuz, a critical shipping route that typically carries much of Asia’s oil and gas supplies.