KUALA LUMPUR (Aug 14): Malaysia’s economy expanded faster than expected in the second quarter of 2026, as household spending and strong exports bucked Iran war concerns.
Gross domestic product rose 6.0% in April-June period when compared to the same quarter in 2025, Bank Negara Malaysia (BNM) said in a statement on Friday. The rate was higher than the official flash estimate of 5.8% and the 5.4% year-on-year gain in the first quarter.
On a seasonally-adjusted basis, the economy gained 2.5% quarter-on-quarter.
"The Malaysian economy remains on a firm footing," said BNM governor Datuk Seri Abdul Rasheed Ghaffour. "Strength across key export segments is expected to support export growth despite heightened external uncertainties."
The central bank is maintaining the growth forecast of 4.0%-5.0% for 2026, while headline inflation is projected to stay moderate at 1.5%-2.5% as projected.
Malaysia is expanding at one of the fastest pace among Southeast Asian economies, thanks partly to a boom in artificial intelligence that kept its export-oriented factories humming. Spending by consumers, shielded by subsidies, has also remained resilient in the face of rising global fuel prices.
Private consumption, Malaysia's main engine of growth, was slightly higher at 4.8% in the second quarter though private investment rose at a much slower pace of 4.3%. Year-on-year, public consumption climbed 7.6%, while public investment gained 6.3%.
Net exports also surged 169% as outbound shipments grew faster than imports.
The services sector — which accounts for more than half of Malaysia’s economic output — expanded 5.9% in the first quarter from a year earlier, driven by strong wholesale and retail trade. The pace was a tad faster than the 5.6% growth registered in the first three months of 2026.
Growth of manufacturing activities, meanwhile, accelerated to 7.3% during the quarter that was largely supported by electrical and electronic products.
Mining production rebounded 9.2% from a contraction in the first quarter, as output of natural gas surged and offset the decline in crude oil. The construction sector's growth moderated to 6.5%, while agriculture shrank 3.7% as palm oil yield declined following a strong 2025.
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