KUALA LUMPUR: Malaysia's gross domestic product (GDP) expanded 6% in the second quarter from a year earlier, surprising slightly to the upside, although the central bank said its growth outlook for 2026 remains unchanged.
Beating the official advance estimate of 5.8% as well as the previous quarter's growth of 5.4%, 2Q GDP was underpinned by household spending supported by steady income growth and policy support, an increase in investments and export growth, said Bank Negara in its economic report.
"Export growth was driven mainly by the continued strength in electrical and electronics (E&E) products and sustained expansion in services, as well as the rebound in exports of liquefied natural gas (LNG) and non-E&E manufacturing products," it said.
On a quarter-on-quarter seasonally adjusted basis, the economy expanded 2.5% in 2Q, as compared to a 0.03% contraction in 1Q.
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The central bank retained its 2026 growth forecast of 4-5%, with recent developments indicating that overall growth could be around 5%. After two quarters, the country's year-to-date GDP growth stands at 5.7%.
Bank Negara governor Datuk Sri Abdul Rasheed Ghaffour acknowledged that the outlook continues to be shaped by external develpoments, but Malaysia is well-positioned to navigate the challenges from a position of strength and policy readiness.
On the bank's inflation outlook, he said headline inflation is projected to average between 1.5–2.5% in 2026.
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"Recent inflation outturns and high-frequency indicators continue to point to modest consumer price increases.
"While external cost pressures arising from the Middle East conflict may exert some upward pressure on prices going forward, the overall impact on inflation for 2026 is expected to remain contained," said the governor.
Domestic policy measures such as targeted fuel subsidies, together with stable demand conditions, are expected to help limit the pass-through of higher global costs to domestic prices.
