Malaysia’s Economy Estimated to Grow 5.8% in Q2 2026

KUALA LUMPUR, JULY 2026 – Malaysia’s economy is estimated to have grown by 5.8% year-on-year in the second quarter of 2026, accelerating from the 5.4% expansion recorded in the preceding quarter, according to advance estimates from the Department of Statistics Malaysia.

The stronger performance was supported by growth across almost all major sectors of the economy, with agriculture being the only sector to record a contraction during the three-month period.

Based on the latest estimate, Malaysia’s economy is projected to have expanded by 5.6% during the first half of 2026. This represents a notable improvement from the 4.5% growth registered in the corresponding period of 2025.

The services sector remained the main driver of economic activity, growing by 5.4% in the second quarter. Its expansion was supported by the wholesale and retail trade, information and communication, as well as transportation and storage subsectors.

Manufacturing recorded stronger growth of 7.5%, accelerating from 5.9% in the first quarter. The improvement was mainly driven by export-oriented industries, including electrical, electronic and optical products, as well as petroleum, chemical, rubber and plastic products.

The stronger manufacturing performance indicates continued demand for Malaysia’s export-related industrial products, particularly within the electrical and electronics supply chain and other major manufacturing segments.

Mining and quarrying also returned to growth, expanding by 10.2% during the quarter. The recovery was mainly supported by improved performance in the natural gas subsector.

Construction expanded by 6.6%, moderating from the 7.7% growth recorded in the first quarter. Activity was supported by non-residential building projects, particularly data centre developments, as well as specialised construction work.

Malaysia has continued attracting investments in data centre infrastructure, contributing to demand for construction, electrical systems, telecommunications facilities and other supporting services. The sector’s continued expansion reflects the role of large-scale infrastructure and digital investment in supporting domestic economic activity.

Agriculture, however, contracted by 3.7%, reversing the 2.6% growth recorded in the preceding quarter. The decline affected nearly all agricultural subsectors, with only other agriculture and livestock activities recording positive performances.

The advance estimate suggests that Malaysia entered the second half of 2026 with firm economic momentum, supported by industrial production, services activity and recovering natural gas output. However, external trade conditions, geopolitical developments and fluctuations in global demand remain important factors that could influence the country’s growth outlook.

The official and more detailed gross domestic product figures for the second quarter of 2026 are scheduled to be released on August 14, 2026. The report will provide a fuller assessment of sectoral performance, domestic demand, investment, exports and household consumption.