Moody's Ratings said Monday that it expects Malaysia's real gross domestic product (GDP) to expand by 4 to 4.5 percent in 2026, on the back of resilient household consumption and fixed capital formation, amid risks from global trade and geopolitical uncertainties.

The rating agency said in a note that Malaysia's domestic consumption will be supported by a low unemployment rate (2.9 percent in November 2025), rising real wages partly due to income-related policy support, and low inflation.

Moody's also expects Malaysia's inflation to average 1.8 percent in 2026.

"Investment demand outlook remains robust due to implementation of multiyear projects, both in the public and private sectors," said the rating agency.

According to Moody's, Malaysia's public investments mainly focus on transportation, energy and civil engineering projects, while Malaysia is attracting foreign investments in electrical and electronics products as well as data centers.

It added that Malaysia is likely to enjoy healthy tourist growth and demand for electronics products, although a slowdown in global growth and of its key trading partners remains a risk, given its open economy.

"We expect the central bank to maintain its neutral monetary policy stance with policy rates around current levels of 2.75 percent in 2026, which will not constrain credit demand," said Moody's.

Overall credit growth across the banking system will be around 5 percent, it added.