KUALA LUMPUR, 6 JANUARY 2026: Malaysia's economic momentum is expected to gain further traction in 2026 following a series of measures announced by Prime Minister Datuk Seri Anwar Ibrahim on Monday, according to UOB Global Economics & Markets Research.
UOB said these measures have been broadly welcomed by the business community, supporting confidence while sustaining activity in consumption, construction, and select services sectors.
The initiatives, spanning economic, business, and institutional reforms, are designed to ease cost-of-living pressures, reduce business expenses, and enhance governance under the Madani Government.
Key measures supporting businesses include a lower service tax rate on rental for SMEs, a one-year penalty-free transition period for e-invoicing, and the full settlement of excess tax refunds for the 2023 and 2024 assessment years. These steps are aimed at reducing operational costs, improving cash flow, and facilitating compliance for enterprises across sectors.
To boost consumption and construction activity, the government will start early disbursement of cash aid from Jan 9 and accelerate the roll-out of small-scale infrastructure projects nationwide.
On the governance front, four Bills will be tabled in Parliament this year to advance institutional reforms, strengthen regulatory frameworks, and enhance transparency.
Combined with the 2026 budgetary measures unveiled in October 2025, the Visit Malaysia Year 2026 campaign and easing global trade risks, UOB expects these factors to underpin a steady growth trajectory for the economy.
The firm projects Malaysia's real gross domestic product growth at 4.5 per cent in 2026, at the upper end of the government's 4.0 per cent-4.5 per cent target.
"With anticipated economic resilience and continued fiscal support, we expect Bank Negara Malaysia to remain comfortable with its current monetary policy stance, leaving the overnight policy rate (OPR) unchanged at 2.75 per cent.
"This also aligns with signals from most major central banks indicating the end of their easing cycles, as the US Fed is also expected to hold rates in the first quarter. The next Monetary Policy Committee (MPC) meeting is scheduled for Jan 22, 2026," the firm said.
