Malaysia Q2 GDP Growth Stronger Than Initially Thought

Malaysia’s economy expanded by 6% year-on-year in Q2 2026, higher than the initially estimated 5.8% and picking up from 5.4% growth in Q1. Activity strongly rebounded in mining and quarrying (9.2% vs -2.1% in Q1), mainly driven by a sharp expansion in natural gas production (19.3%). Output also rose faster in manufacturing (7.3% vs 5.9%) and services (5.9% vs 5.6%). On the other hand, output growth slowed in construction (6.5% vs 7.7%), while agriculture contracted (-3.7% vs 2.6%), primarily due to declines in oil palm (-9.5%) and fishing (-4.4%). On the expenditure side, growth picked up in household consumption (4.8% vs 4.7%) and government spending (7.6% vs 4.1%). Net trade also contributed positively to GDP, as exports climbed 17% (vs 5.2%), while imports rose at a softer 13.9% (vs 4.6%). Meanwhile, growth slowed in gross fixed capital formation (4.6% vs 7.3%). On a quarterly basis, GDP expanded 2.5%, the strongest growth since Q2 2020, after stagnating in Q1.

Malaysia’s economy expanded 5.8% year-on-year in Q2 2026, accelerating from 5.4% in the previous period, according to preliminary estimates. Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin said resilient domestic demand and improvements across key productive sectors continued to underpin growth, despite weakness in agriculture. Mining and quarrying rebounded strongly (10.2% vs. -2.1% in Q1), mainly driven by higher natural gas production. Manufacturing growth also accelerated (7.5% vs. 5.9%), primarily supported by increased output of electrical, electronic and optical products, as well as petroleum, chemical, rubber and plastic products. Growth remained solid but eased in services (5.4% vs. 5.6%) and construction (6.6% vs. 7.0%). Meanwhile, agriculture contracted (-3.7% vs. 2.6%), reflecting weaker output in the oil palm and fishing subsectors. In the first half of 2026, Malaysia’s economy grew 5.6%, up from 4.5% in the same period a year earlier.

Malaysia’s economy expanded 5.4% year-on-year in Q1 2026, slightly above preliminary estimates of 5.3%, but easing from 6.2% in Q4. The slowdown was driven by weaker performance in mining and quarrying (-2.1% vs 1.4%), alongside softer growth in agriculture (2.6% vs 5.7%), manufacturing (5.9% vs 6.0%), and construction (7.7% vs 10.9%). Services growth also moderated to 5.6% from 6.2%, though it remained the main driver of overall expansion. On the expenditure side, growth slowed for private consumption (4.7% vs 5.6%), government spending (4.1% vs 6.6%), and fixed investment (7.3% vs 9.3%). Net trade contributed positively, as exports grew 5.2% while imports rose at a softer pace of 4.6%. On a quarterly basis, the economy was flat, marking the weakest performance since Q4 2022, following a revised 1.4% expansion in Q4. Still, Governor Ghaffour said the economy is seen to remain resilient in 2026, with growth projected at 4%–5%, supported by steady domestic demand and export expansion.