Economics: 1Q26 GDP – Resilient Headline, Softer Underlying Pulse

Malaysia’s economy expanded by 5.4% YoY in 1Q26, easing from 6.2% YoY in 4Q25, as growth remained anchored by domestic demand despite softer sequential momentum. Private consumption and investment continued to provide support, while E&E exports benefited from the ongoing technology upcycle. However, the underlying pulse has moderated, with services, construction and public spending normalising from 4Q25, while mining contracted on weaker oil and gas output.

GDP matters

“We maintain our 2026 GDP growth forecast at +4.6% YoY and OPR call at 2.75%, although the balance of risks is now tilted more clearly to the downside as prolonged Middle East tensions raise the risk of broader supply-chain disruption, higher input costs and more visible pass-through into production, prices and employment conditions.”

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