Malaysia: GDP growth rose markedly in Q2 while inflation eased slightly in June

Research evidence excerpt

Malaysia: GDP growth rose markedly in Q2 while inflation eased slightly in June

Global Markets Research

17 July 2026Asia Insights

Economics - ASEAN/Asia ex-Japan

Research AnalystsMalaysia: GDP growth rose markedly in Q2 while

Asia Economicsinflation eased slightly in June

Euben Paracuelles - NSL

• GDP growth rose to 5.8% y-o-y in Q2 from 5.4% in Q1, driven by higher LNG and euben.paracuelles@nomura.com

manufacturing output, while services sector growth held up. +65 6433 6956

Yiru Chen - NSL • Headline inflation moderated to 1.9% y-o-y in June from 2.0% in May, led by falling yiru.chen1@nomura.com

transportation and jewellery inflation. +65 6433 6405

• We maintain our above-consensus 2026 GDP growth forecast of 5.2%, but see rising

upside risks, owing to resilient domestic demand and a sustained tech uptrend.

• We reiterate our 2026 headline inflation forecast of 2.0% and continue to expect BNM

to hike it policy rate by 25bp to 3.00% in Q4.

GDP growth picked up in Q2

The Department of Statistics (DOSM) reported its advance estimate of Q2 GDP growth,

which picked up markedly to 5.8% y-o-y from 5.4% in Q1 (Figure 1), against consensus

expectations of a slowdown to 5.2%, but closer to our forecast of 5.9%. This brings GDP

growth to 5.6% in H1, which is above the official full-year forecast range of 4-5% and 5.2%

in 2025, despite the Iran war. In sequential terms, this implies GDP growth rose sharply to

2.4% q-o-q sa in Q2, by our estimate, from 0.0% in the previous quarter (see AsiaInsights

-Malaysia:GDPgrowthcontinuestoholdupinQ1, 15 May 2026).

… driven by the mining and manufacturing sectors

The increase was driven by strong mining sector growth, which rebounded substantially to

10.2% y-o-y in June from -2.1% in May (Figure 2), led by higher natural gas production.