Malaysia’s economy powers ahead as exports drive 6% growth in Q2 2026: DOSM - Human Resources Online

KUALA LUMPUR, 17 AUGUST 2026 —

Malaysia’s GDP Growth Accelerates to 6% in Q2 2026 on Strong Exports, DOSM Reports

The growth marked the fastest expansion since the first quarter of 2025, with the economy recording a seasonally adjusted quarter-on-quarter increase of 2.5%, reversing a marginal decline of 0.03% in Q1 2026. For the first half of 2026, gross domestic product (GDP) grew 5.7%, compared with 4.5% in the same period last year.

The services sector, which accounts for nearly 60% of Malaysia’s GDP, remained the key growth driver, expanding by 5.9%. Wholesale and retail trade grew 4.7%, while motor vehicle sales surged 7.5%, supported by strong demand, including for electric vehicles. The information and communication industry posted an 8.3% increase, reflecting rising demand for data-centre services and computer-related activities. Transport and storage also grew 7.0%, buoyed by higher freight and passenger traffic.

Manufacturing output accelerated to 7.3% from 5.9% in Q1 2026, with electrical, electronic, and optical products leading the expansion at 14.4%, driven by sustained global demand for semiconductors and electronic components. Mining and quarrying rebounded strongly, growing 9.2% after a contraction in the previous quarter, with natural gas production rising 19.3%, though crude oil and condensate output declined 3.6%. Construction activity grew 6.5%, supported by industrial facility investments and non-residential projects, though growth moderated from Q1.

Agriculture was the sole sector to contract, shrinking 3.7% after a 2.6% expansion in Q1. The decline was primarily due to a 9.5% drop in oil palm production, attributed to lower fresh fruit bunch output, while livestock and other agricultural segments recorded modest gains.

On the demand side, private final consumption expenditure (PFCE), which constitutes 60.3% of GDP, rose 4.8%, slightly up from 4.7% in Q1. Household spending was strongest in restaurants and hotels (10.9%), transport (7.1%), food and non-alcoholic beverages (3.6%), and communication (3.5%).

Investment growth slowed but remained positive, with gross fixed capital formation (GFCF) increasing 4.6%, down from 7.3% in Q1. Public and private investment contributed to the rise, with spending on structures (4.6%), machinery and equipment (4.7%), and other assets (4.3%) all expanding. Government consumption expenditure also accelerated, rising 7.6% from 4.1% in the previous quarter, driven by higher spending on supplies and services.

Exports were the standout performer, surging 17.0% compared with 5.2% growth in Q1, while imports rose 13.9%, up from 4.6%. The sharp increase in net exports contributed significantly to growth, with the trade surplus expanding by 168.5%, compared with 13.5% in the prior quarter.

The strong Q2 performance underscores Malaysia’s resilience amid global economic uncertainties, with external trade and domestic consumption serving as key pillars. Analysts suggest that sustained semiconductor demand and infrastructure investments will continue to support growth, though risks remain from volatile commodity prices and geopolitical tensions.

Details on sector-specific contributions and forward-looking policy measures were not yet available from DOSM at the time of reporting.