KUALA LUMPUR: Malaysia's gross domestic product (GDP) for the second quarter of 2026 (2Q 2026) is expected to grow by 5.9 per cent, underpinned by stronger manufacturing and mining sectors.
Hong Leong Investment Bank (HLIB) said it anticipates growth in demand to be driven by stronger net exports, with domestic demand remaining resilient despite geopolitical headwinds from the United States-Iran war.
"We expect the manufacturing sector to gain momentum, with the manufacturing Industrial Production Index accelerating to 7.4 per cent (1Q 2026: 5.4 per cent), led by the export-oriented segment, while the domestic-oriented segment remained broadly steady at 4.5 per cent.
"Electric and electrical (E&E) production remained robust, edging up to 14.2 per cent (1Q 2026: 13.6 per cent), in line with stronger-than-expected 2Q 2026 global semiconductor sales according to the World Semiconductor Trade Statistics, which prompted an upward adjustment to its full-year 2026 forecast of 108 per cent," it said in a note today.
Additionally, support is expected from wood products, furniture and printing; basic metals and non-metallic mineral products; as well as transport equipment.
Meanwhile, HLIB expects growth to be boosted by a further widening in trade surplus, with export growth outpacing import growth, led by E&E, liquefied natural gas, manufacture of metals and chemical products.
On the domestic front, it said private consumption is expected to expand on the back of steady labour market conditions and stronger wage growth in the manufacturing sector.
HLIB added that further support is expected from government policy measures aimed at cushioning the impact of higher fuel costs.
For the 2026 outlook, the investment bank maintained its GDP growth forecast at 4.7 per cent, pending the actual 2Q 2026 GDP print.
"Looking ahead, we expect growth to moderate through the second half of 2026, reflecting high base effects, though robust external demand for E&E goods, alongside resilient domestic demand, should continue to support the Malaysian economy," it said. - Bernama
