Malaysia's E&E Exports Sustaining 2H Growth Amid Resilient Global Tech Cycle -- CGS International
KUALA LUMPUR, Aug 4 (Bernama) -- Malaysia is expected to maintain its economic momentum in the second half of 2026 (2H 2026), driven primarily by continued strength in the technology sector as electrical and electronics (E&E) exports remain supported by the global artificial intelligence (AI) investment cycle despite recent corrections in technology stocks.
CGS International Securities Malaysia Sdn Bhd economics and research head Ahmad Nazmi Idrus said Malaysia’s E&E exports typically lag developments in the global technology sector by several months, meaning the current strong export performance reflects the robust global technology cycle earlier this year.
“What you are seeing in Malaysia's E&E exports today is essentially a reflection of what happened globally a few months ago. While technology stocks have experienced some correction recently, the broader technology sector remains fundamentally strong,” he told reporters on the sidelines of The Invest Shariah 2026 conference today.
The conference, themed “Ethical Investing in a Digital and Volatile World”, was co-hosted by Bursa Malaysia and CGS International Securities Malaysia.
Ahmad Nazmi said Malaysia’s technology sector is expected to continue performing well in 2H 2026, barring a significant correction in global technology markets, which he described as unlikely.
“I think Malaysia’s technology sector is going to do quite well in the second half of this year. The momentum should continue into early next year as well,” he said.
Ahmad Nazmi opined that continued investments in AI infrastructure globally are expected to sustain demand for Malaysia’s semiconductor and electronics products, providing further support to exports over the coming months.
Services exports return to surplus after 15-year deficit
Apart from merchandise exports, Ahmad Nazmi said Malaysia has also witnessed a notable turnaround in services exports, with the services balance under the current account posting surpluses for several consecutive quarters after remaining in deficit for the past 15 years.
He said the improvement has been driven mainly by stronger travel and transportation receipts, reflecting a steady recovery in tourism and cross-border economic activities.
“This is a very interesting development because services have been in deficit for the past 15 years. The rebound is largely being driven by the travel and transport sectors,” he said.
Data centres need a stronger spillover effect
On investments, Ahmad Nazmi said Malaysia should now focus on ensuring that strong investment inflows, particularly in data centres, generate broader economic benefits beyond the construction phase.
While data centres have emerged as a new engine of investment growth, he noted that the facilities themselves create relatively limited employment once operational.
As such, he said policymakers should focus on attracting AI-related regional headquarters and research centres, while encouraging greater participation by local suppliers in the data centre value chain to maximise spillover effects.
“The question is what happens after the data centres are completed. The focus should be on creating downstream opportunities through AI activities and increasing local industry participation so that the benefits extend to the wider economy,” he said.
Looking ahead, Ahmad Nazmi expects greater clarity on Malaysia’s investment landscape following the government’s planned announcement of a new industrial roadmap later this year.
He added the roadmap is expected to provide clearer direction on priority sectors and investment incentives, supporting investment momentum over the coming years.
BNM expected to maintain OPR
On domestic demand, Ahmad Nazmi described private consumption as resilient despite moderating from pre-pandemic levels.
He said consumption growth has remained relatively modest as wage increases have yet to fully catch up with rising living costs and education expenses, prompting households to become more cautious in their discretionary spending.
“Consumption is not weak, but it is moderate. Much of Malaysia’s current economic strength is being driven by exports and investments rather than domestic consumption,” he said.
Against this backdrop, Ahmad Nazmi expects Bank Negara Malaysia (BNM) to keep the Overnight Policy Rate (OPR) unchanged for the remainder of the year.
He said the current pace of economic growth does not warrant tighter monetary policy as inflationary pressures remain manageable, and there is also little justification for a rate cut given the economy’s continued resilience.
“I think BNM is in a comfortable position to keep interest rates unchanged. Growth is being supported by exports and investments rather than an overheating domestic economy,” he said.
Bank Negara Malaysia kept the OPR unchanged at 2.75 per cent on July 9, 2026, extending its pause in monetary policy after a 25-basis-point cut in July 2025.
On the ringgit, Ahmad Nazmi said the local currency’s outlook will continue to depend largely on the interest rate differential between Malaysia and the United States.
He expects both BNM and the US Federal Reserve to leave interest rates unchanged for the rest of the year, with the possibility of the Fed easing monetary policy next year.
Against this backdrop, he forecasts the ringgit to trade around RM3.95 against the US dollar by year-end, with some volatility arising from external developments and domestic political uncertainty.
“Overall, the ringgit is likely to remain range-bound, although periods of volatility should be expected as markets respond to global developments,” he said.
-- BERNAMA