Malaysia’s economy continues to demonstrate resilience, supported by strong export performance, steady manufacturing activity and easing inflation, according to OCBC Group Research’s report dated 19 October 2026.
Goods exports surged 54.5% year-on-year (YoY) in September 2026, accelerating from 45.4% in August. Electrical and electronics (E&E) products remained the primary growth driver, expanding 69.2%, complemented by optical and scientific equipment (43.2%), liquefied natural gas (45.7%) and petroleum products (32.9%).
Export demand remained strong across several markets, including the United States (89.9%), Taiwan (175.2%), India (43.7%) and Mainland China and Hong Kong SAR (43.0%).
Meanwhile, imports increased 52.7% YoY in September, driven largely by intermediate goods, which rose 69.9%. Malaysia’s trade surplus widened to RM33.7 billion from RM28.1 billion in August.
Economic Growth Remains Encouraging
Malaysia’s advance GDP estimate showed 5.3% YoY growth in the third quarter of 2026, moderating from 6.0% in the previous quarter but exceeding market expectations of 5.0%.
Manufacturing growth strengthened to 7.5%, while agriculture rebounded to 1.3%. Services and construction recorded growth of 5.4% and 6.0%, respectively.
With GDP expanding 5.5% over the first nine months, OCBC maintained its full-year 2026 growth forecast at 5.2%.
Inflation Eases, Interest Rate Decision in Focus
Headline inflation moderated to 1.8% in September from 1.9% in August, while core inflation remained stable at 1.7%.
OCBC subsequently revised its 2026 headline inflation forecast downwards to 1.9% from 2.0%.
The combination of resilient economic growth and contained inflation presents Bank Negara Malaysia (BNM) with a policy decision. OCBC expects a potential 25-basis-point increase in the Overnight Policy Rate to 3.00%, leaning towards January 2027 rather than November 2026, although the timing remains uncertain.
The outlook: Malaysia’s strong export momentum, particularly in E&E, alongside resilient domestic economic activity and moderate inflation, continues to support the country’s growth prospects heading into the final quarter of 2026.
Source: OCBC Group Research, “Malaysia: Exports Powering Growth”, 19 October 2026. Economic forecasts and policy expectations are attributable to OCBC Group Research.
