Kuala lumpur: Malaysia's economy expanded by 5.4 per cent in the first quarter of 2026, exceeding the advance estimate of 5.3 per cent. This growth was primarily driven by robust domestic demand, investment activities, and sustained export performance, as reported by Bank Negara Malaysia (BNM).

According to BERNAMA News Agency, growth moderated from the 6.2 per cent recorded in the fourth quarter of 2025. BNM highlighted that household spending remained resilient due to favourable labour market conditions and continued policy support, while investment activity was bolstered by spending on machinery and equipment, structures investment, and the implementation of multi-year projects.

Private consumption increased by 4.7 per cent in 1Q 2026, and private investment grew 7.8 per cent. Net exports surged 13.5 per cent, supported by steady export growth and a faster moderation in imports. On the supply side, the services sector grew by 5.6 per cent, while the manufacturing sector expanded by 5.9 per cent, driven by demand for AI-related components.

The agriculture sector recorded slower growth at 2.6 per cent due to normalised palm oil production following strong yields previously. The mining and quarrying sector contracted by 2.1 per cent, attributed to weaker domestic oil and gas production. Meanwhile, construction growth moderated to 7.7 per cent, with support from special trade and non-residential activities.

BNM also reported a wider current account surplus of RM15.2 billion in 1Q 2026, compared to RM2.7 billion in the previous quarter, driven by a larger goods surplus and higher services surplus from travel and ICT receipts. Foreign direct investment inflows sustained at RM22.8 billion, primarily in the ICT and professional, scientific, and technical activities sub-sectors.

Investment growth was supported by the continued implementation of multi-year projects, high realisation of approved investments, and ongoing national master plans. Export growth remained robust, particularly in electrical and electronics (EandE) exports, while gross import growth moderated.

BNM noted a contraction of 0.01 per cent in the economy on a quarter-on-quarter seasonally adjusted basis, compared to 1.4 per cent growth in the fourth quarter of 2025. BNM Governor Datuk Seri Abdul Rasheed Ghaffour warned of potential challenges due to geopolitical tensions in West Asia, impacting energy prices and supply chains.

Despite these external pressures, Abdul Rasheed projected Malaysia's economy to remain resilient in 2026, with growth between four per cent and five per cent, supported by steady domestic demand and export expansion, particularly in global technology sectors.