KUALA LUMPUR: Malaysia's third-quarter 2026 advance gross domestic product (GDP) estimate of 5.3 per cent is a positive surprise despite external shocks, particularly the ongoing US-Iran conflict, economists said.
They told Business Times that while growth moderated from six per cent in the preceding quarter, the slowdown did not necessarily signal a broad-based loss of economic momentum.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said proactive government measures, including targeted fuel subsidies through MyKad introduced last year, had helped cushion the economy against external shocks.
Petroliam Nasional Bhd's efforts to secure fuel supplies from outside the Strait of Hormuz also helped minimise disruptions to domestic economic activity, he added.
Foreign investor interest in Malaysia and stronger demand for technology-related sectors had also supported growth, while full employment and relatively contained inflation helped sustain consumer spending.
"Overall, it is a positive surprise and it looks like the growth numbers could be surprised on the upside with the prevailing GDP growth projection currently standing between 4.8 per cent to 5.3 per cent," the economist said.
He added that growth of 5.3 per cent would put Malaysia's economy above its estimated trend growth rate of around 4.7 per cent.
According to the advance estimate released by the Statistics Department today, Malaysia's GDP is estimated to have grown 5.3 per cent in Q3, slightly higher than the 5.2 per cent recorded in the corresponding period last year.
Bank Negara Malaysia is scheduled to release the official Q3 GDP figures on Nov 18.
Growth eased from six per cent in the preceding quarter, with all economic sectors expanding except mining and quarrying.
For the first nine months of 2026, the economy grew 5.5 per cent, compared with 4.8 per cent in the same period last year.
The services sector remained the main growth driver, expanding 5.4 per cent, supported by wholesale and retail trade, information and communication, as well as finance and insurance activities.
Manufacturing growth accelerated to 7.5 per cent from 7.3 per cent in the preceding quarter, driven by export-oriented industries, particularly electrical, electronic and optical products, as well as petroleum, chemicals, rubber and plastics products.
Construction growth eased to six per cent from 6.5 per cent, supported by non-residential projects, particularly data centres, and specialised construction works.
The agriculture sector rebounded 1.3 per cent after contracting 3.7 per cent in the preceding quarter, driven by oil palm and livestock activities.
In contrast, mining and quarrying contracted 4.9 per cent, reversing the 9.2 per cent expansion recorded in the second quarter, following a decline in crude oil and condensate production.
Despite the expansion, Universiti Teknologi Mara senior lecturer Dr Mohamad Idham Md Razak said Malaysia should remain mindful of risks stemming from its exposure to global trade and the current AI investment cycle.
He said softer global technology spending could weigh on semiconductor exports, manufacturing activity and data centre investments.
Higher oil prices could raise businesses' operating costs and further erode household purchasing power.
"Another concern is whether domestic consumption can remain strong if wages fail to keep pace with living costs.
"Malaysia should therefore strengthen domestic economic resilience by improving productivity, supporting small and medium enterprises, attracting higher-value investments and developing new export markets.
"The priority is not simply to maintain headline growth, but to ensure that growth is broad-based and sustainable, so the economy can withstand external shocks without placing excessive pressure on households or public finances," Idham said.
He said Malaysia remains on a relatively solid growth trajectory, but sustaining this momentum will depend on domestic demand, the quality of investments and efforts to diversify the economy's growth drivers.
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