Malaysia economy expands by 5.3 percent in first quarter

Malaysia recorded an economic expansion of 5.3% year-on-year in the first quarter of 2026, according to official advance estimates released on Friday. This figure represents a moderation from the 6.3% growth seen in the final quarter of 2025, which had marked the fastest pace in three years. The moderation comes as activity in several key sectors slowed from their year-end peaks.

The performance during the January-to-March period was underpinned by sustained growth across the manufacturing, services, and construction sectors. However, the mining and quarrying sector experienced a 1.1% decline, primarily due to reduced production of Brent Crude Oil and Natural Gas.

Chief Statistician Mohd Uzir Mahidin noted that the nation's economic foundation remains strong despite external pressures.

Malaysia’s first quarter of 2026 reflects an economy that remains fundamentally resilient, even with the rising global uncertainties, particularly elevated oil prices following geopolitical tensions.

Bank Negara Malaysia recently adjusted its 2026 growth forecast to a range of 4% to 5%, up from an earlier estimate of 4% to 4.5%. This optimistic outlook is supported by robust household spending, consistent exports, and a recovery in tourism. Nevertheless, the central bank cautioned that prolonged conflict in the Middle East could lead to supply chain disruptions and higher fuel costs, impacting both growth and inflation.

Complementary data released on Friday indicated that consumer price inflation reached 1.7% in March compared to the previous year. This result aligned with analyst expectations and showed a slight increase from the 1.4% inflation rate recorded in February. Finalized GDP data for the first quarter is scheduled for release on May 15.