By Danni Haizal Danial Donald
KUALA LUMPUR, Aug 14 (Bernama) -- Economists have raised their growth expectations for Malaysia’s economy in 2026 following the stronger-than-expected gross domestic product (GDP) performance in the second quarter (2Q) of 2026.
The country’s economy expanded by 6.0 per cent in 2Q 2026, strengthening underlying growth momentum and signalling greater resilience against external shocks, they said.
IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan maintained his 2026 growth forecast at 4.6 per cent, while Juwai IQI global chief economist Shan Saeed raised his forecast to 5.5 per cent-6.3 per cent from 4.5 per cent-5.5 per cent previously.
According to Mohd Sedek, the stronger-than-expected growth reflected encouraging breadth in the country’s economic expansion across sectors, with manufacturing accelerating 7.3 per cent and services remaining resilient at 5.9 per cent.
In fact, the performance brought first-half 2026 (1H 2026) growth to 5.7 per cent, providing a stronger buffer for the rest of the year, he said.
“The economy appears capable of maintaining growth around the 4.0 per cent-5.0 per cent range even if the exceptionally strong export performance normalises,” he told Bernama.
Mohd Sedek expects domestic demand to become the most important marginal driver of growth in 2H 2026, particularly private consumption and investment, with the external sector delivering a very strong contribution in 1H 2026, despite facing growing uncertainties.
“More importantly, I see investment as increasingly important relative to consumption. Malaysia is benefiting from structural capital expenditure in semiconductors, data centres, digital infrastructure and other high-value activities,” he said.
He stressed the 4.6 per cent growth rate remained his baseline forecast for now, adding that he would assess the economy’s performance in 2H 2026 before formally revising the forecast higher.
“The upper end of Bank Negara Malaysia’s (BNM) 4.0 per cent-5.0 per cent range is now clearly within reach.
“BNM itself sees domestic demand as the main anchor of growth, while investment and technology-related exports remain important upside drivers,” Mohd Sedek explained.
Meanwhile, Saeed raised his 2026 GDP forecast to 5.5 per cent-6.3 per cent, citing broader momentum across trade, investment and domestic demand.
He pointed out that Malaysia was not merely sustaining economic momentum but was increasingly demonstrating the characteristics of a more sophisticated and resilient economy, supported by institutional resilience, policy credibility and macroeconomic stability.
“The debate is shifting from whether the economy can defend a 4.0 per cent growth franchise to whether capital deepening, export sophistication, technological upgrading and productivity gains can propel it toward a higher structural growth equilibrium,” he said.
Saeed highlighted Malaysia’s ability to attract RM22.8 billion in net foreign direct investments (FDI) inflows in 1Q 2026, particularly into services, information and communications, and other strategic sectors.
“The quality of investment is increasingly important as productive capital expenditure raises capacity, strengthens productivity and enlarges the economy’s medium-term growth frontier,” he added.
Earlier, BNM announced that Malaysia’s economy expanded by 6.0 per cent in 2Q 2026, surpassing the Department of Statistics Malaysia’s advance estimate of 5.8 per cent.
The central bank said the stronger growth was driven by sustained domestic demand and robust export performance.
-- BERNAMA