PETALING JAYA: Malaysia’s economy grew 5.4% in the first quarter of 2026, exceeding both the Department of Statistics Malaysia’s (DOSM) advance estimate and Bloomberg’s median forecast of 5.3%, despite global uncertainty stemming from the conflict in West Asia.
The government said the stronger-than-expected growth marked the second consecutive quarter in which the economy outperformed market expectations, supported by resilient domestic demand, steady household spending and continued investment activity.
Domestic demand grew 5.2% during the quarter, underpinned by a strong labour market and higher disposable income following the implementation of the second phase of the Public Service Remuneration System (SSPA), Bantuan Khas Kewangan (BKK) payments for civil servants, and continued aid distribution through Sumbangan Asas Rahmah (SARA).
The external sector also remained supportive amid ongoing global trade and geopolitical uncertainty.
The government said investments in artificial intelligence technologies and data centres continued to record strong momentum, driven by facilitative policies and a conducive investment environment as Malaysia positions itself as a regional digital and technology hub.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim said the government’s Ekonomi Madani reforms, centred on pro-growth policies, rakyat-centric programmes and responsible fiscal management, had helped strengthen Malaysia’s economic resilience.
“This approach has helped Malaysia build on the 5.2% growth recorded in 2024 and 2025, to achieve 5.4% growth in the first quarter of 2026,” he said.
Anwar said prudent fiscal management had also enabled the government to mitigate the impact of higher global fuel prices on households and businesses through targeted subsidy mechanisms such as Budi Madani RON95 (Budi95) and enhanced assistance under Budi Diesel.
He said continued job creation had lowered the unemployment rate to 2.9% during the quarter, the lowest level in a decade, while inflation remained moderate at 1.6%.
“These developments have helped support resilient domestic demand,” he added.
