Malaysia's GDP growth beats expectations [WATCH]

In Malaysia, the third-quarter 2026 GDP growth estimate of 5.3 per cent has surpassed expectations, despite external challenges such as the US-Iran conflict, according to economists. The improvement in growth, which moderated from six per cent in the previous quarter, does not indicate a loss of overall economic momentum. Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, attributes this to proactive government measures like targeted fuel subsidies through MyKad, and Petroliam Nasional Bhd's efforts to secure fuel supplies outside the Strait of Hormuz.

Strong foreign investor interest and higher demand for technology-related sectors have also contributed to the growth. The economist expects the GDP growth projection to be on the higher side, between 4.8 per cent and 5.3 per cent, putting Malaysia's economy above its estimated trend growth rate of 4.7 per cent. Malaysia's GDP grew 5.3 per cent in Q3, slightly higher than the 5.2 per cent growth in the same period last year.

The services sector led growth, expanding 5.4 per cent, while manufacturing accelerated to 7.5 per cent. Construction growth slowed to 6 per cent, but the agriculture sector rebounded 1.3 per cent after a 3.7 per cent decline in the previous quarter. However, mining and quarrying contracted 4.9 per cent. Malaysia's senior lecturer, Dr Mohamad Idham Md Razak, warns about risks from global trade exposure and higher oil prices.

He emphasizes the need to strengthen domestic economic resilience by boosting productivity, supporting SMEs, attracting higher-value investments, and developing new export markets. Malaysia remains on a solid growth trajectory, but sustaining this momentum depends on domestic demand, quality investments, and diversifying growth drivers.