PETALING JAYA: The gross domestic product (GDP) is expected to show resilient expansion in the first quarter of financial year 2026 (1Q26), supported by firm external trade momentum and steady domestic demand.
This is despite growth likely having moderated from the previous quarter’s elevated pace.
According to analysts, the advance 1Q26 GDP growth at 5.3% year-on-year (y-o-y) pointed to a still-robust performance, with underlying conditions suggesting continued stability heading into the rest of the year.
BIMB Research noted there was a clear upside bias to growth in 1Q26, largely concentrated in March, driven by a rebound in mining and agricultural output as well as stronger exports amid firmer global commodity prices and improved production conditions.
In its report, the research house said: “We project exports to contribute positively to GDP growth in 1Q26, supported by a notable strengthening in external trade momentum.
“In the first two months of 2026, Malaysia recorded a trade surplus of RM38.7bil, more than double the RM16.3bil surplus in January to February 2025 (2M25), representing a 137.6% y-o-y increase.”
“This widening surplus was primarily driven by robust export growth of 15.2% y-o-y over 2M26, while import growth remained more moderate at an average of 6.4% y-o-y,” it added.
BIMB Research projected export growth of 13.5% y-o-y in 1Q26, citing manufacturing exports and re-exports as key contributors.
On the broader outlook, it projected GDP growth to moderate from 5.2% in 2025 to 4.7% in 2026, placing its forecast at the upper end of Bank Negara Malaysia’s projected range of 4% to 5% for 2026.
It emphasised that domestic demand would remain the main pillar, while commodity price strength and tourism recovery posed upside risks.
Apex Securities Research turned more constructive on near-term growth, revising its 1Q26 GDP estimate to plus 5.3% from plus 4.9% previously.
“Despite rising geopolitical risks from the Middle East conflict, Malaysia’s underlying fundamentals remain supportive of growth momentum for the rest of the year,” the research house said.
It highlighted private consumption as the key anchor, supported by labour market resilience and targeted subsidies.
Apex Securities also underscored investment continuity, noting that record-high approved investments of RM426.7bil in 2025 would likely translate into realised investments in 2026.
Further, it said early government engagement suggested no immediate cancellations despite geopolitical tensions.
“We maintain our 2026 GDP forecast at plus 4.7%, which remains achievable under current conditions,” Apex Securities said.
However, it cautioned that risks were tilted to the downside, particularly if Middle East tensions persisted into 3Q26, potentially dragging growth towards the lower end of the official range.
TA Research adopted a more neutral stance, making no changes to its 1Q26 GDP assumption, noting that the advance estimate was broadly in line with its expectations.
“For 2026, we maintain our GDP growth forecast in the range of 4.3% to 4.7% under our base case scenario,” it said, adding that growth would be supported by domestic demand and gradual external recovery.
Hong Leong Investment Bank Research maintained its 2026 GDP growth forecast at 4.5%, underpinned by domestic demand and continued growth in electrical and electronics exports.
It noted steady private consumption, supported by subsidies and policy measures, but warned of downside risks from higher costs and potential disruptions in the second half of the year.
Official data showed Malaysia’s advance GDP estimate indicated that growth moderated to 5.3% in 1Q26, easing from 6.3% in 4Q25 but remaining above the central bank’s 4% to 5% annual target.
The moderation in 1Q26 growth reflected normalisation after strong year-end expansion, particularly in construction and services, while underlying momentum remained intact.
Actual GDP data for 1Q26 will be released on May 15, 2026.
Meanwhile, one analyst said the underlying GDP momentum still appeared intact, as steady consumption and improving trade conditions helped cushion the impact of a more challenging global environment.
“Growth in 1Q26 likely remained on a firm footing, with external demand and domestic spending providing sufficient support to growth,” he said.
