How have resilient exports supported BNM’s decision to pause?

Question

Accepted Answer

Bank Negara Malaysia's Decision to Maintain the Overnight Policy Rate is Supported by Robust Export Performance

Economists anticipate Bank Negara Malaysia (BNM) will hold the overnight policy rate (OPR) at 2.75 per cent, with the resilience of the nation's external sector being a primary factor underpinning this decision. This stability in monetary policy is seen as appropriate, particularly following pre-emptive easing measures implemented last year to mitigate external economic shocks. The well-diversified nature of Malaysia's export base has significantly contributed to the overall economic resilience observed.
Strong Export Growth Bolsters Economic Stability

The nation's export performance has demonstrated remarkable strength, with a notable year-on-year growth of 45.3 per cent recorded in May 2026. This expansion was significantly driven by key sectors, including a 70.5 per cent surge in electrical and electronic sector exports and an impressive 111 per cent increase in liquefied natural gas exports. Furthermore, a rise in information and communication technology services exports has positively impacted the services account, contributing to a widening of the current account surplus.
Current Account Surplus Reflects External Sector Strength

The positive trend in exports has directly contributed to an increase in Malaysia's current account surplus, which reached 3.0 per cent of the gross domestic product in the first quarter of 2026. This surplus indicates a healthy balance of payments, where the value of goods and services exported exceeds that of imports. The robust performance of the external sector, as evidenced by these figures, provides a stable foundation for the economy, allowing BNM to maintain the current monetary policy stance.
Monetary Policy Stance Aligns with Economic Conditions

The current policy rate of 2.75 per cent is considered appropriate by economists, given the existing economic landscape. While private consumption growth was recorded at 4.7 per cent in the first quarter of 2026, below its historical average, and the unemployment rate saw a slight increase to 3.0 per cent in April, the strength in exports provides a counterbalance. Maintaining the OPR steady is viewed as a strategic necessity to support respectable economic growth in the latter half of 2026, without the immediate pressure to adjust interest rates.

Reading history

Hide →

This history is cleared when the page is closed.

How have resilient exports supported BNM’s decision to pause?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

2

0

0

Share with friends