KUALA LUMPUR: The economy could expand by up to five per cent in 2026, as market assessments point to stronger domestic demand and investment, said Prime Minister Anwar Ibrahim.

This is broadly in line with projections from the Finance Ministry and international institutions, he said.

Anwar's speech was read by Finance Minister II Datuk Seri Amir Hamzah Azizan at Affin Group's 50th anniversary and Chinese New Year dinner on Saturday.

"Based on official projections, Malaysia's economy is expected to expand between 4.0 and 4.5 per cent in 2026, supported by steady domestic demand and sustained investment activity. However, current market assessments place growth at between 4.5 and 5.0 per cent in 2026, reflecting strengthening domestic demand and continued investment momentum."

Anwar said inflation is expected to remain moderate and well contained, in line with Bank Negara Malaysia's monetary policy objectives.

He said the central bank is expected to maintain a policy stance that supports growth while safeguarding price stability and the soundness of the financial system.

However, Anwar cautioned that risks remain elevated, citing geopolitical tensions, shifts in global trade policies and volatility in financial markets, which require disciplined risk management and strong governance.

"In managing this growth, the government remains committed to fiscal discipline and financial system stability. Structural reforms are being implemented in a phased and prudent manner, taking into account market conditions, the welfare of the rakyat and the capacity of financial institutions to support this transition. This balanced approach is essential to sustaining investor confidence and strengthening Malaysia's economic resilience."

Anwar said the banking sector plays a critical role beyond providing financing, serving as a stabiliser of the financial system, a facilitator of investment and an anchor of market confidence.

Within this framework, he said institutions, such as Affin Group, play an important role in supporting system stability, expanding productive financing and ensuring continued credit flow to the real economy.