Malaysia’s growth tops forecasts as AI boom drives export surge
Malaysia's Q3 GDP grew 5.3%, beating forecasts but slowing from 6%, as AI-driven electronics exports and resilient domestic demand supported growth. It expects about 5% growth in 2026.
KUALA LUMPUR – Malaysia’s economic growth slowed but still exceeded expectations as the artificial intelligence boom continued to bolster exports and domestic demand remained resilient.
Gross domestic product rose 5.3% in the three months through September from a year earlier, according to advance estimates from the Department of Statistics Malaysia on Oct 16, beating the 5.1% median prediction in a Bloomberg survey.
Third quarter growth, however, slowed from the 6% expansion in the previous three-month period.
Third quarter growth was underpinned by positive performance across most economic sectors, the department said in a statement.
Only the mining and quarrying sector contracted, it added.
The better-than-expected reading underscores the resilience of Malaysia’s economy even as growth moderates from a strong first half.
Robust domestic consumption and demand for electronics used in artificial intelligence have helped cushion the trade-dependent economy from disruptions caused by the US war against Iran.
“The out turn is broadly in line with our forecast and suggests the growth momentum remains robust, albeit moderating from strong growth in the first half of 2026,” said Lavanya Venkateswaran, economist at Oversea-Chinese Banking Corp.
“This very much leaves the door open for Bank Negara Malaysia to normalise its policy rate by 25 basis points. Our baseline for the adjustment is in January but it is a close call for the November meeting.”
The ringgit was steady at 4.08 per dollar after the GDP print, while local stocks held losses.
The services sector rose 5.4%, bolstered by wholesale and retail trade, information and communication as well as finance, the statistics department said.
Manufacturing strengthened by 7.5%, backed in part by export-oriented industries, particularly electrical and electronic products.
Bank Negara Malaysia governor Abdul Rasheed Ghaffour said in an interview this week that the economy is likely to grow about 5% in 2026, with the nation’s diverse sources of growth helping cushion it against any slowdown in the AI boom.
Malaysia’s economy grew 5.5% during the three quarters of 2026, the department said, above the government’s revised growth forecast of 4.8% to 5.3% for the year.
The government in October raised the forecast from 4% to 5% previously.
Household spending remains firm, as fuel subsidies helped shield consumers from elevated energy cost.
Prime Minister Anwar Ibrahim earlier in October also announced more cash aid and a higher minimum wage for 2027 to ease cost-of-living pressures.
The government expects Malaysia’s economy to grow at 4.2% to 5.2% in 2027, supported by sustained domestic demand investment activity.
Preliminary GDP data, which will provide a detailed analysis of the third quarter, will be released on Nov 18.BLOOMBERG
Source: The Straits Times https://www.straitstimes.com/business/malaysias-growth-tops-forecasts-as-ai-boom-drives-export-surge?ref=latest
