ECONOMIC CROSSCURRENTS MARCH 

Published on 01 Apr 2026

ECONOMIC CROSSCURRENTS MARCH

IPP MY36 Thermometer with Asia Macro Lens 

Malaysia is entering an externally-driven cooling phase, with financial markets repricing risk ahead of lagged macro adjustment. The IPP MY36 Thermometer has declined to its lowest level since tracking began, reflecting weaker external demand, tighter global financial conditions and re-emerging cost pressures at the margin. The adjustment is being led by forward-looking indicators, while domestic fundamentals remain intact, resulting in a more uneven and externally dependent growth profile.

Asia’s macro-financial environment is turning less supportive, as USD strength, geopolitical tensions and policy uncertainty reshape financial and trade dynamics. While supply chains remain operationally stable, risks are increasingly driven by liquidity conditions and policy developments, raising sensitivity to capital flows, currency movements and cross-border demand.

Markets are front-running a slowdown that is not yet fully reflected in macro data. As 2026 progresses, the environment is shifting from expansion towards margin defence, with risks skewed towards softer external demand and rising cost pressures.