MBSB Upgrades Malaysia’s 2026 GDP Growth Forecast to 5.1%

Malaysia Building Society Berhad (MBSB) has revised its projection for Malaysia’s 2026 GDP growth upward to +5.1%, compared with its earlier forecast of +4.5%. The upgrade reflects stronger-than-expected performance in the first half of the year, driven by resilient external trade and robust domestic demand. Malaysia’s GDP expanded by +6.0% year-on-year in 2QCY26, slightly above advance estimates and expectations.

MBSB noted that growth was supported by higher activity in services and manufacturing, alongside a rebound in mining output and stronger household spending. Domestic demand contributed +3.7 percentage points, accounting for about 61% of total GDP growth in the quarter. Private consumption alone added +2.9ppt, while net exports contributed +2.4ppt, up sharply from +0.6ppt in the previous quarter.

GDP Growth

On the supply side, services expanded by +5.9% year-on-year, manufacturing accelerated to +7.3%, and mining rebounded strongly to +9.2% following higher natural gas production. Construction moderated to +6.5%, while agriculture contracted -3.7%, reversing earlier gains.

Despite the upbeat revision, MBSB cautioned that Malaysia’s outlook remains vulnerable to downside risks, including escalating geopolitical tensions, prolonged trade disruptions, tighter global trade rules, inflationary pressures, and weaker final demand.

The institution highlighted that while momentum is encouraging, external uncertainties could weigh on growth in the second half of the year. Malaysia’s GDP growth in 2025 stood at +5.2%, providing a strong base for continued expansion, though policymakers and businesses are advised to remain vigilant against global headwinds.

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