KUALA LUMPUR: Malaysia's gross domestic product (GDP) grew at a slightly faster-than-anticipated rate of 5.4% in the first quarter of 2026, as economic growth moderated from 6.3% in the preceding quarter last year.
Advance estimates had pegged the growth rate at 5.3%, with analysts anticipating the normalisation of growth following strong year-end expansion in 2025, particularly in construction and services.
“Malaysia’s economy continued to expand in the first quarter of 2026, reflecting underlying resilience and stable growth conditions amid a challenging global environment.
"While most major sectors remained on an expansionary path, the pace of growth eased following the strong performance in the preceding quarter," said chief statistician Datuk Dri Mohd Uzir Mahidin in a statement released by the Statistics Department.
In a separate statement, Bank Negara said quarterly headline inflation increased to 1.6% from 1.3% in the previous quarter, while core inflation moderated to 2.1% from 2.3%.
According to the central bank, the higher headline inflation reflected some initial cost pass-through of higher global cost pressures, partly due to the conflict in the Middle East.
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Commenting on the country's outlook, Bank Negara governor Datuk Sri Abdul Rasheed Ghafffour said Malaysia will inevitably face both direct and indirect impact from the ongoing geopolitical conflict in the Middle East. "Higher energy prices, supply chain disruptions, and heightened uncertainty are expected to weigh on the external environment," he said.
Headline inflation is projected to average 1.5% to 2.5% in 2026 as inflation is expected to edge higher due to elevated global energy and other commodity prices, broadly in line with expectations.
However, Abdul Ghaffour reiterated the economy is expected to remain resilient in 2026 with growth expected to come in within the 4-5% range, supported by steady domestic demand and continued expansion in our export performance.
READ ALSO: Malaysia's economy to grow 4-5% in 2026 backed by domestic resilience
According to him, resilient domestic demand will provide a strong buffer against external headwinds.
Household spending will be underpinned by firm labour market conditions and continuous policy support, while investment activity will be driven by the continued progress of multi-year projects in both the private and public sectors, as well as the ongoing implementation of national master plans.
