Bank Negara governor: AI boom drives 57pc surge in Malaysia’s E&E exports in Q2

KUALA LUMPUR: Malaysia's robust economic growth in the second quarter of 2026, driven by the global artificial intelligence (AI) surge, has outpaced expectations, according to HSBC senior Asean economist Yun Liu. The country's economy expanded by 6 percent year-on-year in Q2, surpassing the Statistics Department's earlier estimate of 5.8 percent and the 5.4 percent growth seen in Q1.

Liu attributed the stronger performance to Malaysia's deep integration into global electronics supply chains, which has positioned the nation to capitalize on the surging demand for AI-related technologies. Despite the ongoing energy crisis, Malaysia's Q2 final GDP growth accelerated to 6.0 percent year-on-year, showcasing the diversity of its economy.

Liu noted that Malaysia's economic success mirrors that of regional counterparts like Singapore and Vietnam, both of which have extensive electronics supply chains. She emphasized that the strength of Malaysia's electronics trade is a key indicator of the AI-driven upswing. While growth in the services and construction sectors has slowed, they remain resilient, lending further support to the economy.

For the first half of 2026, Malaysia's economy expanded 5.7 percent year-on-year, placing it as the third-fastest growing economy in the Association of Southeast Asian Nations (Asean) behind Vietnam and Singapore. Alongside the economy's growth, Malaysia has also enjoyed one of the lowest inflation rates in the region, thanks to government subsidies that have kept the price of RON95 petrol at RM1.99 per liter, effectively curbing inflation.

With both growth and inflation remaining favorable, HSBC economist Yun Liu believes Bank Negara Malaysia has the flexibility to wait and observe the situation, even as global macroeconomic uncertainties rise. HSBC forecasts that Bank Negara is likely to maintain its policy rate unchanged for both 2026 and 2027.