Malaysia’s economic prospects remain positive in May 2026 with the Leading Index (LI) rising 0.8 per cent to 114.4 points compared to 113.5 points in the corresponding period last year, according to the Department of Statistics Malaysia.
The Leading Index (LI) fell by -0.5%mom, marking its first monthly contraction in three months and the sharpest decline since Jan-26; reversing a downwardly revised +1.1%mom expansion in Apr-26. As a result, the annual growth for LI moderated to +0.8%yoy (Apr-26: +1.3%yoy). The monthly pullback was primarily dragged down by contractions in real imports of basic precious and non-ferrous metals (-0.6%mom), approved housing units (-0.2%mom), and new company registrations (-0.4%mom). These drags offset positive gains in real imports of semiconductors (+0.2%mom), the Bursa Malaysia Industrial Index (+0.1%mom), real M1 money supply (+0.2%mom), and expected sales value in manufacturing (+0.2%mom).
Similarly, the Coincident Index (CI) slipped -0.3%mom to 131.20, reversing +0.9%mom gain in Apr-26. The decline in May-26 was largely attributable to lower utilisation rate in the manufacturing sector amid ongoing global uncertainties. On the year-on-year perspective, the CI continued to increase at +2.5%yoy, albeit easing slightly from +2.6%yoy in Apr-26. The sustained rise in CI was driven almost all components (such as real EPF contribution, volume of retail trade and industrial production) except capacity utilisation in the manufacturing sector.
MBSB foresees Malaysia’s macroeconomic outlook remaining broadly sustainable, although the monthly dip and moderate annual growth in LI signal some easing in growth momentum in 2H26. Sustained gains in semiconductor imports and manufacturing expectations nevertheless point to continued structural support from the global technology upcycle.
Backed by resilient private consumption, the house noted that the softer reading likely reflects a temporary adjustment amid global supply-chain pressures rather than the onset of a structural downturn. While strong export performance could lift overall growth in 2026, MBSB reiterated that downside risks—including supply disruptions, elevated inflation and tighter trade rules—could weigh on Malaysia’s near-term growth outlook.
