PETALING JAYA: The economy will likely grow 6.6% year-on-year in the first quarter of 2026 (1Q26), based on an estimate by Moody’s Analytics.
Seasonally adjusted, this translates to growth of 0.9%, it said ahead of the advance gross domestic product (GDP) data to be released this Friday.
In 4Q25, robust domestic demand powered Malaysia’s economy beyond expectations, lifting the GDP for the October-December 2025 period by 6.3% – the strongest in three years and well above the advanced estimates.
Moody’s Analytics said Malaysia’s exports have held steady so far, with the key electrical and electronics sector still benefiting from the tech boom.
“Demand for palm oil is also expected to surge, as countries turn to alternative fuel sources such as biofuels in response to the spike in global oil prices.
“Fuel price subsidies will likely insulate households and firms from higher costs for now, although second-round effects will weigh on growth if the conflict drags on.”
In a statement yesterday, the Center for Market Education (CME) said Malaysia’s economic trajectory must be evaluated through its structural fundamentals, rather than short-term volatility.
It pointed out that Malaysia’s strong performance in 2025 provided a critical starting point. “The economy expanded by 5.2%, supported by domestic consumption growth of 5.3% and robust sectoral contributions from construction (11%), services (6.3%) and manufacturing (6.1%).
“These outcomes reflect deep-rooted structural drivers, including infrastructure expansion, digitalisation, and sustained strength in electrical and electronic (E&E) exports, rather than temporary cyclical factors.”
CME expects the economy to grow by 4% to 4.5% this year, which is roughly in line with the forecasts of Bank Negara Malaysia (4%-5%). The World Bank had recently upgraded its forecast from 4.1% to 4.4%.
A central element underpinning Malaysia’s growth resilience is its economic complexity, according to CME.
“With an Economic Complexity Index of 0.82 and a global ranking of 32, Malaysia’s diversified and sophisticated export structure provides a critical buffer against external shocks.”
The think-tank also noted that Malaysia’s policy response plays a crucial role in shaping the transmission of the shock from the US-Iran war. The government has implemented a series of measures, including fuel subsidies, diversification of energy sources, and targeted controls such as the BUDI95 programme and the Subsidised Diesel Control System or SKDS.
CME said these interventions help delay and smooth the pass-through of global price increases into domestic prices.
It also said that Malaysia benefits from several structural buffers that distinguish it from more vulnerable economies.
These are namely, its status as a partial energy exporter; the appreciation of the ringgit and the persistence of a current account surplus; supply continuity; and the country’s ability to diversify energy sources, adjust production inputs and explore alternative supply routes
“However, these buffers are not without cost. They function as shock absorbers by redistributing the burden of adjustment: towards fiscal balances, corporate margins, and administrative mechanisms.
“If the disruption persists, these buffers will gradually weaken, and a greater share of the adjustment will be reflected in consumer prices and reduced growth,” added CME.
