DBS Group Research projects Malaysia's advance Gross Domestic Product (GDP) to grow by 5.5% year-on-year in the first quarter of 2026, slightly below the 6.3% growth recorded in the fourth quarter of 2025 but still considered robust. The growth is attributed to continued strength in export-oriented electrical and electronics manufacturing, global AI tailwinds, construction, and supportive domestic demand. Services also expanded robustly, supported by sustained household spending. Headline inflation is expected to rise modestly to 1.7% in March, up from 1.4% in February, with food and energy prices seeing some upward pressure due to festive-related spending and a spike in global oil prices following the Iran war. However, fiscal subsidies are expected to cushion the overall impact of these price increases [1].
TD Securities forecasts China's Q1 GDP to rise by 4.8% year-on-year, supported by strong exports and manufacturing earlier in the quarter. After a strong trade report in January and February, exports are expected to normalize in March, while imports could surprise on the upside as authorities stockpile key goods and commodities amid the ongoing US–Iran conflict. Rising input costs may slow production and weigh on exports in the near term. Industrial production is likely to remain steady in March, but firms may reconsider output plans due to increasing costs. Retail sales may underperform as consumers brought forward spending during the Chinese New Year holidays and the early rollout of consumer trade-in program subsidies [2].
Both Malaysia and China are experiencing resilient economic growth in the first quarter, despite external shocks such as the Middle East conflict and rising global oil prices. Malaysia's inflation remains contained due to government subsidies, while China's growth is supported by strong manufacturing and export performance, though future risks are noted due to rising input costs and potential export slowdowns [1][2].
Analyst opinions from DBS and TD Securities highlight the importance of export-oriented sectors and government interventions in mitigating inflation and supporting growth. Forward-looking statements suggest that while Malaysia's inflation is expected to stay contained, China's production and export outlook may face challenges if input costs continue to rise [1][2].
CONCLUSION
Malaysia and China have demonstrated robust GDP growth in Q1, supported by strong manufacturing and exports, despite global trade disruptions and inflationary pressures. Market sentiment remains cautiously optimistic, with Malaysia's inflation contained by subsidies and China's outlook tempered by rising input costs. Both economies are positioned for continued resilience, though future risks warrant close monitoring.