Export-driven exceeding expectations, Malaysia's GDP soared by 5.8% in the second quarter, with inflation easing.

Boosted by the improvement in the service sector and strong exports of electronic products, Malaysia's economy in the second quarter significantly exceeded market expectations, offsetting the impact of the Middle East conflict. According to preliminary data released by the Malaysian Statistics Department on Friday, the country's GDP grew by 5.8% year-on-year in the period from April to June this year, higher than the median forecast of 5.2% from Bloomberg's surveyed economists; in the first quarter of 2026, the country's economy grew by 5.4%. Strong domestic demand combined with a buoyant semiconductor export sector cushioned the disruption caused by the Middle East conflict, leading the market to further believe in Malaysia's ability to maintain its position at the forefront of high economic growth in Southeast Asia this year. Despite rising uncertainty in the global economic outlook, significant expansion in investments related to semiconductors and artificial intelligence continues to support the country's economic growth. The Statistics Department stated, "In the second quarter of 2026, the service sector remains the core driving force behind economic growth." The mining sector also saw a recovery, growing by 10.2% year-on-year. In terms of inflation, the consumer price index in June fell to 1.9%, while analysts had previously estimated that the data would remain at the 2% level seen in May. Malaysia has relied on fuel subsidies to offset the impact of high international oil prices, effectively stabilizing the extent of price increases for domestic consumer goods.