External Risks, Domestic Politics To Weigh On Malaysia's Economy In 2027 -- Economist

KUALA LUMPUR, Oct 8 (Bernama) -- Malaysia’s economic growth is expected to face external risks in 2027, particularly geopolitical uncertainty, the United States (US) trade protectionism policy, and high interest rates in developed nations, an economist said.

Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the ongoing West Asia conflict and the protectionist policies of US President Donald Trump’s administration are among the external developments that demand greater attention.

He said the single biggest risk is undoubtedly external, as the West Asia conflict persists while protectionist policies under the Trump administration remain firmly in place.

“Most recently, we have observed a significant rise in interest rates -- particularly in the bond markets of developed economies such as the US, Europe, and Japan.

“This signals that while an economy can still grow, there will come a time when interest rates need to be lowered,” he told the media following Bank Muamalat’s Corporate Economic Forum 2026. 

Mohd Afzanizam said the global economic cycle is currently proceeding smoothly, yet the potential for an economic downturn remains within the next three to four years. 

Commenting on the domestic economy and investor sentiment, with a general election looming next year, he said investors, particularly foreign institutional investors, are expected to assess policy developments, the political climate, and the dynamics of the country’s political coalitions. 

“Investors, particularly foreign institutional investors, will certainly keep in tune with the policies to be introduced, the political climate and its dynamics, the nature of the political coalition, and likely the upcoming state election in Malacca as well,” he said. 

-- BERNAMA