Driven by continued domestic demand and strong exports the national economic growth strengthened to six per cent in the second quarter of 2026 surpassing the 5.4 per cent growth recorded in the first quarter of 2026.
According to Bank Negara Malaysia Governor Datuk Sri Abdul Rasheed Ghaffour, Malaysia’s economy remains on a strong track.
“The economic growth in 2026 is projected to remain in the projected range of 4 per cent to 5 per cent with the latest developments signalling the overall growth has the potential to reach around 5 per cent.
“While the growth outlook continues to be influenced by external developments, Malaysia is well-positioned to meet these challenges, supported by strong economic fundamentals and policy readiness,” he said at the Second Quarter 2026 Economic Performance press conference at Sasana Kijang on Friday which was also attended by the Head of the Department of Statistics Malaysia (DOSM), Siti Asiah Ahmad.
Abdul Rasheed stressed that domestically, household spending will continue to be supported by income growth as well as the continuous implementation of policy measures.
“Meanwhile, investment activities will be driven by the progress of multi-year projects in the private and public sectors, the rate of realization of approved investments which remain high and the continued implementation of the national master plan.
“The rapid growth in exports was mainly driven by continued strong demand for electrical and electronic (E&E) products and continued expansion of services, in addition to the recovery of liquefied natural gas exports and non-E&E manufactured products,” he said as reported by Sinar Harian.
In terms of supply, growth was supported by the expansion of the services and manufacturing sectors.
The higher growth of the services sector was driven by business-related subsectors, especially the information and communication technology (ICT) subsector due to the increased operation of data centres.
Strong growth in the manufacturing sector was driven by export-oriented industry groups, particularly the E&E segment following high demand for artificial intelligence (AI)-related products.
The mining and quarrying sector again recorded positive growth, reflecting higher natural gas production.
Based on a seasonally adjusted quarterly basis, the economy grew by 2.5% (Q1 2026: -0.01%).
However, on the whole inflation is projected to be on the average between 1.5 per cent and 2.5 per cent in 2026.
Abdul Rasheed said the latest inflation data and high-frequency indicators continued to show a modest increase in consumer prices.
“While external cost pressures following the conflict in the Middle East are expected to exert some upward pressure on prices, the overall impact on inflation in 2026 is expected to remain under control.
“Domestic policy measures such as targeted fuel subsidies and stable demand conditions are expected to limit the transfer of higher global costs to domestic prices,” he said.
The ringgit, on the other hand, continues to be supported by strong domestic economic fundamentals and Malaysia’s positive growth momentum.
For the period earlier this year to 12 August 2026, the ringgit continued to perform broadly stable against the US dollar (-0.9%) as well as other major Malaysian trading partner currencies (NEER: -1%).
Going forward, while external factors will continue to influence exchange rate movements, Malaysia’s positive economic outlook coupled with ongoing structural reforms are expected to continue to support the ringgit.
“BNM will continue to closely monitor global developments and remain committed to ensuring that the domestic foreign exchange market remains functioning in an orderly manner,” he said.
