Key facts
- Malaysia's Q2 GDP growth is projected to be 5.8% year-on-year.
- This represents an acceleration from 5.4% growth in Q1.
- Strong exports, particularly in electronics driven by AI demand, are a key driver.
- Resilient domestic demand, supported by employment and fiscal measures, is also contributing.
- Malaysia's economy is forecast to grow 4%-5% for the full year.
Malaysia's economic growth is anticipated to have accelerated in the second quarter, with a Reuters poll of economists forecasting a 5.8% year-on-year increase in GDP. This would mark an improvement from the 5.4% growth recorded in the first quarter. The acceleration is expected to be driven by robust exports, particularly in the electronics sector fueled by strong demand for semiconductors and AI-related technologies, and by resilient domestic demand supported by employment and fiscal stimulus measures.
Exports saw a significant surge of 45.4% in June, the fastest pace since August 2022, contributing to a trade surplus of 14.9 billion ringgit ($3.65 billion). Economists like Qi Hang Tay from Economist Intelligence Unit and Meekita Gupta from Pantheon Macroeconomics highlighted the strong demand for AI-related products and the diversification of manufacturing away from China as key factors supporting this trend. They anticipate the current upcycle to continue.
Domestic demand has also shown resilience, bolstered by favorable employment conditions and fiscal measures aimed at supporting lower-income groups. Credit card spending remains robust. Despite global uncertainties, including the Middle East conflict, Malaysia's central bank governor indicated that the economy is projected to grow between 4% and 5% for the full year. Bank Negara Malaysia has maintained its benchmark interest rate at 2.75% since July 2025 and is expected to keep it unchanged through the end of 2027.