KUALA LUMPUR, July 21, 2026 — Malaysia’s economy expanded by 5.8 per cent year-on-year in the second quarter of 2026, surpassing market expectations of 5.2 per cent and improving from the 5.4 per cent growth recorded in the first quarter.
The stronger-than-expected performance was driven mainly by the mining and manufacturing sectors, reflecting continued resilience in industrial activity despite external uncertainties.
Analysts said the manufacturing sector is expected to remain supported by sustained global demand for electrical and electronic (E&E) products, while the services sector should continue benefiting from resilient domestic consumption and business activity.
However, economic growth is forecast to moderate in the second half of the year as the delayed effects of supply chain disruptions and other external headwinds become more apparent. Sectoral performance is also expected to remain uneven as industries adjust to changing global demand and cost pressures.
Economy Grows
Following the stronger second-quarter performance, economists have revised Malaysia’s full-year 2026 gross domestic product (GDP) growth forecast upward to 5.0 per cent, from an earlier estimate of 4.7 per cent. The revised projection sits at the upper end of Bank Negara Malaysia’s official forecast range of 4.0 to 5.0 per cent.
Looking ahead, Malaysia’s economy is projected to expand by 4.5 per cent in 2027, reflecting expectations of more moderate global and domestic macroeconomic conditions.
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