Economic Update May

Published on 04 Jun 2026

ECONOMIC CROSSCURRENTS

IPP MY36 Thermometer with Asia Macro Lens 

Malaysia’s growth momentum remains resilient, supported by strengthening exports, improving manufacturing activity and stable domestic demand. The IPP MY36 Thermometer remained firmly in the Strong Zone, with improving indicators pointing to increasingly broad-based growth. Despite external uncertainties, domestic and external demand continue to provide balanced support. Asia’s macro-financial environment is stabilising, as easing financial transmission risks and resilient regional manufacturing conditions support external activity. However, rising energy prices, higher freight costs and persistent geopolitical uncertainty are becoming increasingly important drivers of business conditions.

As a result, risks are shifting from liquidity and financing concerns towards cost pressures and margin management.

Bottom line: Growth remains intact, but the operating environment is becoming more selective. As 2026 progresses, the focus is shifting from managing financial conditions towards navigating higher input costs, protecting margins and maintaining operational efficiency.