Malaysia’s economy powers ahead as exports drive 6% growth in Q2 2026: DOSM

The services sector remained Malaysia’s main growth driver, expanding 5.9%, followed by manufacturing at 7.3%, mining & quarrying at 9.2%, and construction at 6.5%.

Malaysia’s economy grew by 6% year-on-year in the second quarter of 2026, accelerating from 5.4% in Q1 2026, supported by stronger domestic consumption and a surge in exports.Malaysia’s economy grew by 6.0% year-on-year in the second quarter of 2026, accelerating from 5.4% in Q1 2026, supported by stronger domestic consumption and a surge in exports.

The latest figures from the Department of Statistics Malaysia (DOSM) show growth was broad-based across most of the economy. Manufacturing, services, mining, and construction all expanded, while agriculture was the only major sector to shrink.

On a seasonally adjusted quarter-on-quarter basis, the economy grew 2.5%, following a marginal 0.03% decline in the first quarter. For the first half of 2026, GDP grew 5.7%, compared with 4.5% in the same period last year.

The services sector remained the main pillar of the economy, growing 5.9%. Wholesale and retail trade rose 4.7%, while motor vehicle sales increased 7.5%, helped by demand for cars, including electric vehicles.

Meanwhile, the information and communication industry was one of the stronger areas, growing 8.3% as data-centre activity and demand for computer and information services continued to increase. Transport and storage expanded 7.0%, with both freight and passenger activity contributing to the rise.

For manufacturing, growth accelerated to 7.3% from 5.9% in the previous quarter. The biggest contribution came from electrical, electronic and optical products, which grew 14.4% amid continued demand for semiconductors and electronic components.

Mining and quarrying also bounced back, growing 9.2% after contracting in the first quarter. Natural gas production rose 19.3%, although crude oil and condensate output fell 3.6%.

The construction sector also grew 6.5%, supported by specialised construction work and non-residential building projects. The figures suggest investment in industrial facilities and technology-related infrastructure is still providing a solid base for the sector, even though growth was slower than in the first quarter.

On the flipside, the agriculture sector moved in the other direction, contracting 3.7% after growing 2.6% in the first quarter. The decline was largely due to a 9.5% fall in oil palm production, as output of fresh fruit bunches dropped. Livestock and other agriculture still recorded modest growth.

From the expenditure side, household spending remained a steady driver of growth. Private final consumption expenditure (PFCE), which accounts for 60.3% of Malaysia’s GDP, rose 4.8%, edging up from 4.7% in the previous quarter. Consumers spent more on restaurants and hotels, where expenditure rose 10.9%, followed by transport at 7.1%. Spending on food and non-alcoholic beverages increased 3.6%, while communication spending rose 3.5%.

Investment growth slowed but remained positive. Gross fixed capital formation (GFCF) rose 4.6%, compared with 7.3% in the first quarter, supported by a 4.6% increase in spending on structures, particularly non-residential buildings. Investment in machinery and equipment grew 4.7%, while other assets rose 4.3%. Both public- and private-sector investment contributed to the increase.

Government spending (GFCE) also picked up, rising 7.6% from 4.1% in the previous quarter, largely due to higher expenditure on supplies and services.

Trade provided the strongest lift. Exports jumped 17.0%, compared with 5.2% growth in the first quarter, while imports rose 13.9%, up from 4.6%. The stronger pace of exports pushed net exports up 168.5%, compared with 13.5% in the previous quarter.

READ MORE: Putrajaya records lowest state-level unemployment rate in Malaysia in Q2 2026

Lead image and infographics / DOSM