KUALA LUMPUR: Malaysia's economic outlook is expected to remain broadly steady, supported by resilient domestic demand and the economy's ability to adapt to global changes and technological advancements, according to the Department of Statistics Malaysia's (DOSM) latest Malaysia Economic Statistics Review (MESR), Volume 7/2026.
"Malaysia's economic outlook is expected to remain broadly steady, supported by Malaysia's Leading Index (LI), which rose 0.8% year-on-year in May 2026, reaching 114.4 points as against 113.5 points in May 2025,” DOSM said.
On a month-on-month basis, however, the LI declined 0.5%, driven by a decrease in real imports of other basic precious and non-ferrous metals (-0.6%).
“Despite remaining below 100.0 points in its smoothed long-term trend, Malaysia's economy is expected to stay resilient, supported by stable domestic demand and adaptability to global changes and technological advancements," DOSM said.
In the second quarter of 2026, Malaysia's economy expanded by 5.8%, up from 5.4% in the preceding quarter, bringing first-half growth to 5.6%, up from 4.5% in the same period last year.
"Malaysia's economy expanded by 5.8% in the second quarter of 2026, up from 5.4% in the preceding quarter. Overall, the Malaysian economy grew by 5.6% in the first half of 2026, compared with 4.5% during the same period in 2025.
“The growth was supported by the services and manufacturing sectors, alongside the recovery in the mining & quarrying sector and the continued expansion of the construction sector. in contrast, the agriculture sector contracted due to lower production of palm oil and fisheries," DOSM said.
Industrial activity remained resilient, with the Industrial Production Index rising 8.4% year-on-year in May, driven by manufacturing (6.6%) and mining (19.8%). Manufacturing sales grew 8.9% to RM172.7bil, although they slipped 1.4% from April.
Wholesale and retail trade sales rose 11% year-on-year to RM171.3bil in May, led by wholesale trade (+18.4%) and retail trade (+7.2%), while the motor vehicles sub-sector declined 2.3%.
Malaysia's trade remained robust, with total trade climbing 29.8% year-on-year to RM327.6bil in May as exports surged 45.3% to RM184bil and imports rose 14.1% to RM143.6bil, lifting the trade surplus to RM40.4bil.
The momentum continued in June, with total trade increasing 44.7% year-on-year to RM340.9bil.
Meanwhile, headline inflation eased to 1.9% in June from 2.0% in May, while the producer price index strengthened to 9.2% in June after rising 7.8% in May.
The labour market remained stable in May, with the unemployment rate holding at 3.0% as the labour force rose to 17.34 million and employment increased to 16.82 million.
