Malaysia's economy grew by 5.8 per cent in the second quarter of 2026, accelerating from 5.4 per cent in the first quarter and comfortably beating market expectations of around 5.2 per cent, according to advance estimates from the Department of Statistics Malaysia (DOSM). The stronger performance was broad-based, supported by growth across services, manufacturing, mining and construction, while agriculture was the only sector to shrink.

Manufacturing picked up sharply on the back of higher output of electrical, electronic and petrochemical products, and mining and quarrying rebounded strongly after a weak start to the year, largely thanks to increased natural gas production.

Construction also grew steadily, helped by a wave of non-residential building projects, including new data centres. For the first half of 2026 overall, the economy expanded 5.6 per cent, well above the 4.5 per cent recorded over the same period last year.

Economists say the results are especially encouraging given global headwinds, including elevated energy prices and disrupted shipping routes tied to tensions in the Middle East. The strong showing has led several banks to revise their full-year growth forecasts for Malaysia upward, with many now expecting growth to comfortably exceed 5 per cent for 2026 as a whole.

By the Numbers

  • Q2 2026 GDP growth: 5.8%, up from 5.4% in Q1 2026
  • First-half 2026 growth: 5.6%, versus 4.5% in the same period last year
  • Beat the consensus market forecast of around 5.2%

Sector Breakdown

  • Manufacturing rebounded sharply on higher electrical, electronic and petrochemical output
  • Mining and quarrying rebounded on increased natural gas production
  • Construction grew steadily, helped by non-residential projects including new data centres
  • Agriculture was the only sector to contract during the quarter

What's Next

  • Several banks have revised full-year 2026 growth forecasts above 5%
  • Economists flag risks from elevated energy prices and Middle East shipping disruption