Malaysia’s GDP Growth Slows to 5.3% in Third Quarter of 2026

Malaysia’s third-quarter GDP rose 5.3% from a year earlier, slowing from 6.0% in the second quarter as manufacturing strengthened, while faster manufacturing and electronics exports highlighted its role in global technology supply chains.

Output was valued at RM466.4 billion in constant 2015 prices, and growth for the first nine months of 2026 was 5.5%. Growth was 5.4% in the first quarter and 6.0% in the second. The advance estimate used data available for July and August, with estimated values for unavailable data, so it remains subject to revision.

Manufacturing output rose 7.5% year over year, up from 7.3% in the second quarter. The increase was supported by export-oriented electrical, electronic and optical products, along with petroleum, chemical, rubber and plastic products. Services rose 5.4% year over year, down from 5.9% in the prior quarter; mining and quarrying shrank 4.9% after a 9.2% gain. The mining decline partly reflected lower crude oil and condensate production.

August shipments of electrical and electronic products totaled RM92.48 billion, a 66.5% annual increase representing 48.4% of exports that month. The category totaled RM656.14 billion from January through August.

Electronics production, chip assembly and packaging connect Malaysia to supply chains serving AI hardware. Investment in data centers in Malaysia also contributes to regional growth, while AI’s economic influence remains more visible in industry than elsewhere in the economy. Malaysia and Singapore both export technology products as assemblers and packagers in the region.

A slowdown in AI investment and related financial strains pose risks to the region. Carlos Felipe Jaramillo, World Bank vice president for East Asia and Pacific, said: “The challenge now is to turn the region’s strength in producing AI-related goods into widespread AI adoption that boosts productivity and creates more and better jobs for millions of people.”

The official full-year growth projection for 2026 is 4.8% to 5.3%. Separate forecasts for the year are 5.1% and 5.2%, with the 5.1% forecast raised by 0.7 percentage point on Oct. 6. The full-year outlook is separate from the quarterly advance reading. A preliminary report on third-quarter GDP is scheduled for Nov. 18.