PETALING JAYA: The country’s economy has exceeded expectations for a second consecutive quarter, growing 5.4% in the first quarter of 2026 despite heightened global uncertainties arising from the Middle East conflict, says the Prime Minister.
Datuk Seri Anwar Ibrahim said both the Statistics Department of Malaysia's (DOSM) advance estimate and Bloomberg’s median forecast projected Malaysia’s gross domestic product (GDP) growth at 5.3% for the quarter.
"The sustained momentum reflects the government’s fiscal discipline and steady economic stewardship amid continued global instability," he said in a statement on Friday (May 15).
Anwar, who is also the Finance Minister, said domestic demand and the external sector remained resilient in the quarter.
"Domestic demand expanded by 5.2%, supported by steady household spending amid a buoyant labour market and higher disposable income following the second phase of the Public Service Remuneration System (SSPA), Bantuan Khas Kewangan for civil servants, and continued assistance through Sumbangan Asas Rahmah.
"Investments in artificial intelligence technologies and data centres also remained strong, supported by facilitative policies and a conducive investment environment," he added.
Anwar said the government’s focus on Madani economic reforms, anchored on pro-growth policies, people-centric programmes and responsible fiscal management, continues to strengthen Malaysia’s momentum.
"This approach has helped Malaysia build on the 5.2% growth recorded in 2024 and 2025, to achieve 5.4% growth in the first quarter of 2026.
"At the same time, responsible fiscal management has enabled the government to cushion the impact of higher global fuel prices on the rakyat and businesses through measures such as Budi Madani RON95 (Budi95) and enhanced assistance under Budi Diesel, while continuing to support household spending and economic growth," he added.
Anwar also said that continued job creation has lowered the unemployment rate to 2.9%, the lowest in a decade.
"Meanwhile, inflation remained moderate at 1.6% during the quarter. These developments have helped support resilient domestic demand," he added.
The ringgit’s sustained strength as one of Asia’s best-performing currencies, Anwar said, together with the rebound in the FTSE Bursa Malaysia KLCI Index and net foreign direct investment inflows of RM22.8bil in the quarter, reflected renewed confidence in Malaysia’s economy.
"While the Madani Economy has delivered long-overdue reforms in fiscal and economic management, the government remains vigilant about the impact of the Middle East conflict on global demand, supply chains and market stability.
"The prolonged conflict poses risks (to Malaysia) through continued disruptions to global supply chains, particularly in higher energy, logistics and input costs.
"If prolonged, these pressures could translate into higher inflation and weigh on domestic demand, business costs and overall growth momentum," he added.
Against this backdrop, Anwar said the government has formalised a crisis management task force under the National Economic Action Council to monitor developments closely and coordinate real-time responses to emerging risks.
As of Thursday (May 14), he said, the government has announced RM15bil in financing support for micro, small and medium enterprises (MSMEs) through micro-financing, business loans and guarantees.
"Adjustments to targeted fuel subsidies, together with continued support through Budi95 and enhanced assistance under Budi Diesel, are aimed at cushioning the impact of higher global energy prices on eligible households and businesses while supporting broader economic stability.
"These measures are also expected to improve subsidy efficiency, contain escalating fiscal costs, and further reduce leakages through strengthened enforcement against smuggling.
"Our immediate priority is ensuring economic stability and minimising the external impact of the crisis on the public.
"At the same time, the government remains committed to staying the course on economic reforms while ensuring that growth translates into tangible outcomes for the public," Anwar said.
