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Retail trade, manufacturing activity, and the labour market remained resilient in February 2026, helping cushion the impact of softer industrial production, moderating trade momentum, and global economic uncertainty.
Malaysia’s domestic activity continued to support economic growth amidst global challenges in Q1 this year, according to the latest Malaysia Economic Statistics Review (MESR), Volume 4/2026 released by the Department of Statistics, Malaysia (DOSM).
The report focused on recent statistics released in February 2026, alongside selected upcoming statistics for March 2026.
On the global front, the report said the world economic outlook for 2026 is expected to remain moderate and relatively stable, supported by easing inflation pressures and steady global demand conditions.
The International Monetary Fund projected global economic growth at 3.3% in 2026, unchanged from the estimated 3.3% recorded in 2025.
According to the report, the outlook is backed by continued fiscal and monetary policy support, gradual recovery in services-related activity, and ongoing investment in technology-related sectors.
However, DOSM also warned of downside risks including policy uncertainty, financial market volatility, and escalating trade tensions among major economies, which could affect open economies such as Malaysia through trade and financial linkages.
Commenting on Malaysia’s recent economic performance, Mohd Uzir Mahidin, Chief Statistician Malaysia said the country’s advance Gross Domestic Product (GDP) estimates recorded growth of 5.3% in the first quarter of 2026, compared with 6.3% in the previous quarter.
On a quarter-on-quarter basis, Malaysia’s economy declined 4.4%, reversing the 3.3% growth registered in Q4 2025.
The report also showed that Malaysia’s Industrial Production Index (IPI) remained in positive territory in February 2026, recording 3.1% year-on-year growth, although slower than the 5.9% growth recorded in January 2026.
The expansion was mainly supported by the manufacturing sector, which grew 4.2%, alongside a 4.6% increase in electricity output. Meanwhile, the mining sector contracted 2%, reversing the marginal growth recorded in the previous month. On a month-on-month basis, the IPI declined 9.2%, compared with a 0.6% increase in January, indicating softer industrial production.
Malaysia’s manufacturing sector also remained positive in February 2026, although at a more moderate pace. Total manufacturing sales value increased 3.9% year-on-year to RM159.2bn, compared with 7.1% growth in January 2026.
The electrical and electronics (E&E) sub-sector continued to drive growth, recording a 13.8% increase. The non-metallic mineral, basic and fabricated metal products sub-sector, as well as the food, beverages and tobacco sub-sector, also posted small increases.
However, on a month-on-month basis, total manufacturing sales declined 6.0% from RM169.2bn in January 2026, reflecting softer monthly performance.
Driven by sustained domestic economic activity, Malaysia’s wholesale and retail trade sector continued to expand in February 2026. Total sales value increased 5.3% year-on-year to RM156.3bn.
Retail trade generated RM70.1bn in sales, rising 7.7% year-on-year, while wholesale trade recorded RM69.5bn in sales, growing 5.7%.
In contrast, the motor vehicles sub-sector declined by RM0.9bn, bringing total sales to RM16.7bn.
Total external trade growth in February
On the external front, Malaysia’s total trade grew 9.5% year-on-year to RM245.2bn in February 2026. Exports increased 10.8%, while imports rose 8.2%. As a result, the trade surplus widened to RM16.7bn, an increase of RM4.1bn compared with the same period last year.
However, on a month-on-month basis, exports, imports, total trade, and trade surplus all recorded declines compared with January 2026, indicating moderation in external trade performance.
In terms of prices, Malaysia’s inflation moderated to 1.4% year-on-year in February 2026, reflecting more contained price increases across most consumer categories.
Higher increases were recorded in insurance & financial services, education, and restaurant & accommodation services. Moderate increases were also seen in food & beverages, health, housing-related costs, and information & communication.
On a month-on-month basis, headline inflation edged up 0.2%, mainly driven by housing-related costs, transport, and clothing & footwear. Meanwhile, inflation in March 2026 increased to 1.7%.
Malaysia’s PPI also continued to decline in February 2026, contracting 3.4% year-on-year, deeper than the 2.9% contraction recorded in January 2026. The decrease was mainly driven by continued price declines across the agriculture, mining, and manufacturing sectors.
On a month-on-month basis, the PPI slipped 0.5%, reversing the 0.1% increase recorded in January. However, Malaysia’s PPI increased 1.1% in March 2026, marking its first increase since March 2025.
The report further showed that Malaysia’s labour market remained stable in February 2026.
The labour force edged up 0.1% month-on-month to 17.30mn persons, while the labour force participation rate remained unchanged at 70.9%. The number of unemployed persons declined 0.6% to 506,800 persons, while the unemployment rate remained unchanged at 2.9%. Employment also recorded a marginal increase of 0.1%, rising to 16.79mn persons from 16.77mn in the previous month.
Looking ahead, the report said Malaysia’s economic outlook is expected to remain broadly steady, supported by continued improvement in the country’s Leading Index (LI), which rose 0.5% year-on-year to 113.1 points in February 2026.
However, on a month-on-month basis, the LI declined marginally by 0.3%, reflecting moderation across selected components.
Overall, the report said Malaysia’s economy continues to reflect a steady but moderate growth environment, supported by domestic demand, stable labour market conditions, and contained inflationary pressures, although external uncertainties remain a key risk to near-term performance.
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Infographic / DOSM
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