KUALA LUMPUR: Malaysia is on track to exceed the official full-year gross domestic product (GDP) growth expectation of 4.8 to 5.3 per cent after the economy expanded by 5.5 per cent in the first nine months of 2026, said economists.
The Finance Ministry, in its Economic Outlook 2027 report, has raised its 2026 real GDP growth projections to 4.8 to 5.3 per cent, up from 4.0 to 4.5 per cent in Budget 2026.
Prof Dr Yeah Kim Leng, director of the economic studies programme at the Jeffrey Cheah Institute of Sunway University, said the third-quarter (3Q) GDP expansion of 5.3 per cent affirms the economy's resilience despite continuing geopolitical uncertainty and persistent global oil shocks.
"With growth hitting 5.5 per cent in the first three quarters, the economy is on track to exceed the full-year official 4.8–5.3 per cent GDP growth expectation," he told Bernama.
Yeah said growth moderated slightly compared with the previous quarter but held up well against the challenging external backdrop of continuing geopolitical uncertainty and persistent global oil shocks.
"Encouragingly, the manufacturing sector picked up pace, indicating sustained export demand not only for high-value electronics and optical products but also resource-based chemicals, plastics and rubber products that have higher domestic value added," he added.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the latest GDP performance was a positive surprise, with growth potentially surprising on the upside against the prevailing projection of between 4.8 per cent and 5.3 per cent.
"At 5.3 per cent, the Malaysian economy is seen to be growing above its trend level of around 4.7 per cent," he said.
Mohd Afzanizam said positive appetite among foreign investors to invest in Malaysia, along with greater demand for the technology-related sector, helped sustain economic growth momentum.
Full employment also helped maintain steady consumer spending as inflation remained fairly contained, he added.
Earlier today, the Department of Statistics Malaysia (DOSM) announced in its advanced estimates report that Malaysia's economy expanded by 5.3 per cent in 3Q 2026, after registering 6.0 per cent growth in the preceding quarter, while for the first three quarters of 2026, the economy achieved growth of 5.5 per cent, higher than the 4.8 per cent recorded in 2025's corresponding period.
Domestic demand and E&E to sustain growth
Meanwhile, RHB Investment Bank Bhd (RHB IB) is maintaining its 2026 GDP growth projection at 5.4 per cent, with its autoregression and leading economic index models pointing to sustained growth momentum of 5.0–5.2 per cent in the second half of the year (2H 2026).
"Robust growth of 5.7 per cent in 1H 2026, together with today's 5.3 per cent growth reading, which was in line with our in-house expectation, reinforces our constructive outlook.
"Looking ahead, economic activity is expected to remain supported by resilient domestic demand and sustained strength in electrical and electronics (E&E) exports," it said in a research note today.
RHB IB said private consumption is projected to remain firm, underpinned by healthy labour market conditions, continued income growth and civil servant salary adjustments.
"Private investment should also remain resilient, driven by infrastructure projects, ongoing data centre developments and capacity expansion in manufacturing.
"Meanwhile, continued digitalisation, automation and favourable global demand should encourage further investment, particularly in manufacturing and information and communication technology," it said.
In a separate note, Kenanga Investment Bank Bhd has also maintained its full-year growth forecast at 5.3 per cent, although the stronger-than-expected advance estimate points to an upside risk to its forecast.
It said any revision would hinge on September's data and the full GDP release.
"Domestic demand should increasingly drive growth in the 2H 2026, backed by resilient consumer spending, strong services activity and continued investment in artificial intelligence (AI) and digital infrastructure.
"Implementation of approved projects, rising household incomes, and a firm labour market add further support," it said.
Kenanga said that manufacturing should remain a key driver on sustained E&E demand from AI and data centre expansion, although growth may slow as front-loading fades.
External risks remain, OPR hold expected
Mohd Afzanizam said the Malaysian economy remained fairly resilient despite external shocks, especially the ongoing war in Iran, which is likely to affect global supply chains and fuel costs.
He said proactive government measures, such as targeted fuel subsidies via MyKad since last year, along with efficiencies demonstrated by Petroliam Nasional Bhd in procuring fuel supplies beyond the Strait of Hormuz, had allowed the economy to operate almost seamlessly.
RHB IB, however, said geopolitical tensions in West Asia, commodity price volatility and shifting trade policies pose risks to the outlook.
"Prolonged tensions and elevated oil prices could raise production and transportation costs while dampening global demand," it said.
Separately, CIMB Treasury and Markets Research said the stronger third-quarter outturn points to a modest overshoot of its 5.0 per cent growth forecast for 2026, which would be revised after the full 3Q GDP release in November.
"Stronger external demand remains supportive of the manufacturing outlook, particularly in E&E, where manufacturers have reported longer order books," it said.
Despite the GDP upside, CIMB retained its expectation for Bank Negara Malaysia to hold the Overnight Policy Rate (OPR) at 2.75 per cent in November, given signs of moderating domestic activity and contained inflation.
RHB IB also expects the OPR to remain unchanged at 2.75 per cent at the November Monetary Policy Committee meeting, saying the current economic environment and inflation trajectory support a broadly stable policy outlook.
DOSM said the preliminary GDP, which provides a detailed and comprehensive analysis of economic performance for 3Q 2026, will be released on Nov 18, 2026.
-- BERNAMA
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