Malaysia GDP

Economic growth accelerates in the second quarter of 2026

GDP growth picks up: According to a second release, Malaysia's GDP grew 6.0% in annual terms in Q2, following 5.4% growth in the previous quarter and up from the preliminary estimate of 5.8%. On a seasonally adjusted quarter-on-quarter basis, GDP grew 2.5% in Q2, following a flat reading in the prior quarter.

Exports surge on AI demand: Relative to the prior period's data, figures in Q2 improved for private consumption (+4.8% on a year-on-year basis vs +4.7% in Q1), government consumption (+7.6% vs +4.1% in Q1), exports of goods and services (+17.0% vs +5.2% in Q1) and imports of goods and services (+13.9% vs +4.6% in Q1). In contrast, the reading for fixed investment worsened in Q2 (+4.6% vs +7.3% in Q1). Exports surged more than expected to reach the quickest pace in over three years, bolstered by demand for semiconductors and other AI-related goods.

GDP growth to trend down: As export growth cools, our panelists expect GDP growth to trend down through Q4, reaching its lowest in nearly two years but remaining comfortably above the 10-year average of 4.0%.

Panelist insight: Nomura’s Euben Paracuelles and Yiru Chen said: “We now raise our GDP growth forecasts to 5.6% from 5.2% for 2026 and to 5.3% from 5.0% for 2027. […] The sustained global tech uptrend and broadening AI-related demand should continue to drive electronics exports with a 6-8 month lag, boosting manufacturing output. We also expect investment spending to remain strong, helped by the implementation of the government’s structural reforms. The Johor-Singapore Special Economic Zone (JS-SEZ) is likely to provide an additional boost, in our view, as approved investments are materializing, alongside progress in connectivity-boosting infrastructure projects […]. Private consumption should also hold up, supported by a stable, low unemployment rate of 3.0% sa in Q2.” EIU analysts have also upped their forecasts, but expect GDP growth to ease more sharply in H2: “We have raised our GDP growth forecast for 2026 from 4.8% to 5.2% to incorporate the strong second-quarter outturn. […] Malaysia’s established semiconductor assembly and testing industry, alongside continued investment in chipmaking and data centres, will support the outlook for manufacturing, construction and business services. However, part of this exceptional performance reflects temporary factors, rather than a corresponding increase in long-term domestic production. Trade diversion, precautionary inventory accumulation and the front-loading of shipments amid uncertainty over Middle East supply disruption and volatile US trade policy have amplified headline export growth. As these effects unwind, export expansion is likely to normalise from its current exceptionally high rates.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Malaysian GDP projections for the next ten years from a panel of 39 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable GDP forecast available for Malaysian GDP.

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