Strong 2Q26 growth sparks GDP forecast upgrades
The growth was driven by a stronger manufacturing sector, which expanded at its fastest rate in nearly two decades, led by the electrical and electronics sector, according to the Statistics Department's advance…
Source: The Star · July 22, 2026 at 10:02 PM · AI-assisted report
Single-source
KUALA LUMPUR, 23 JULY 2026 —
The growth was driven by a stronger manufacturing sector, which expanded at its fastest rate in nearly two decades, led by the electrical and electronics sector, according to the Statistics Department's advance estimates.
Market Impact
Kenanga Research maintained its 2Q26 GDP growth forecast at 5.7% and its full-year 2026 GDP forecast at 4.5% to 5%, citing domestic demand as a key driver of growth in the second half of the year.
Domestic demand is expected to be supported by services activity, AI-related investment, and low unemployment, said Kenanga Research, which also expects the overnight policy rate to remain unchanged through 2026.
Hong Leong Investment Bank Research kept its 2026 GDP growth forecast unchanged at 4.7%, but noted that the stronger-than-expected 2Q26 advance estimate shifted the balance of risks to the upside.
Private consumption is expected to be anchored by stable labour market conditions and wage growth, while investment activity is expected to moderate but remain supported by approved investment and public projects.
Apex Securities Research revised its 2026 GDP growth forecast upward to 5%, citing sustained demand for electrical and electronics products and resilient domestic demand.
The research house expects growth to moderate in the second half of the year, with sectoral performance likely to remain uneven due to supply disruptions.
Phillip Capital Research believes the balance of risks remains tilted to the upside, supported by the upside potential in the manufacturing sector, and will likely upgrade its 2026 GDP growth forecast following the release of the full GDP report.
TA Research maintained its view that 2H26 growth is likely to moderate from the strong performance recorded in 1H26, due to expected normalisation in key indicators and lingering geopolitical uncertainties.
An analyst with a local brokerage noted that external risks, including the fragile US-Iran ceasefire and uncertainty over US tariff policy, will continue to dominate Malaysia's economic outlook.
The analyst also cited the normalisation of front-loading activity and El Nino-related weather disruptions as risks to trade, manufacturing, and agricultural output.