DBS Group Research expects Malaysia’s 1Q26 advance gross domestic product (GDP) to grow 5.5% year-on-year, down slightly from 6.3% in 4Q25 but still strong. Growth is seen supported by export-oriented electrical and electronics manufacturing, global AI tailwind, construction and domestic demand. Headline inflation is forecast to rise modestly to 1.7% in March, with oil-driven pressures likely to be eased by fiscal subsidies.
AI tailwind and mild price pressure
“Despite the Middle East shock from Feb 27, incoming data from Malaysia is likely to show resilient economic growth and moderate inflation in 1Q26.”
“We expect a strong advance GDP growth estimate of 5.5% year-on-year in 1Q26, although down from 6.3% year-on-year in 4Q25.”
“Growth was supported by continued strength in export-oriented electrical and electronics manufacturing, supported by global AI tailwinds, as well as supportive domestic demand driven by ongoing construction and investment momentum, while services expanded strongly amid continued domestic spending as well as these spillovers.”
“We estimate that headline inflation will rise but remain limited to 1.7% in March from an annual increase of 1.4% in February.”
“This reflects some upward pressure on food prices due to festival-related spending and pressure on energy prices following the rise in global oil prices due to the Iran war, although the overall impact is mitigated by fiscal subsidies.”
(This article was created with the help of an artificial intelligence tool and reviewed by an editor.)
