PETALING JAYA: The services sector is projected to grow by 5.2% in 2026, with all subsectors contributing to the expansion.
This growth will be led by increased tourism activities, driven by a surge in visitor arrivals and spending related to VM2026, alongside sustained consumer spending.
According to the Economic Outlook 2026 report, the wholesale and retail trade subsector will remain the key driver for the services sector, with a growth of 5% mainly attributed to the retail segment.
Vigorous seasonal sales and promotional campaigns across stores as well as e-commerce and social media platforms will stimulate buying activities.
Meanwhile, the motor vehicles segment is expected to rebound, supported by higher booking for new vehicles.
The transportation and storage subsector is forecast to grow by 7.1%, supported by all segments following the expansion in rail, highway, port and airport activities.
The land transport segment is anticipated to be boosted by the commencement of operations of the Light Rail Transit 3 Phase 1 and ETS south bound as well as operationalisation of the East Klang Valley Expressway.
Likewise, the air transport segment is expected to be driven by increased flight frequencies, expanded route connectivity and a surge in international passenger traffic in conjunction with VM2026. The targeted incentives and airport capacity upgrades will further support growth in both passenger and cargo segments. The water transport segment is projected to expand in tandem with encouraging trade activities.
The finance and insurance subsector is anticipated to expand by 2.8% with positive growth in all segments, supported by sustained economic activities. Under the finance segment, loan growth is anticipated to remain moderate amid steady credit demand from the household sector.
The real estate and business services subsector is projected to grow by 6.7%, driven by sustained demand for professional services.
The growth is expected to be spurred by engineering-related services, benefiting from increased demand for logistic hubs, warehouses and ongoing development of industrial parks. This expansion is also anticipated to be fuelled by new demand from key projects, including the JS-SEZ and continuous construction activities for new data centres.
The information and communication subsector is expected to grow 4.3%, mainly driven by expansion in Al technologies, data centre and cloud computing capacities as well as continued government support through comprehensive digital policies and infrastructure upgrades.
In addition, the subsector will be fuelled by higher social commerce activities via various social platforms as well as subscriptions of over-the-top media services for e-sports and entertainment. Major sporting events such as the 2026 FIFA World Cup, BWF Thomas and Uber Cup 2026 and the 2026 Commonwealth Games will increase the number of subscribers, further boosting the subsector.
The food and beverages and accommodation subsector is poised to expand by 6.6%, in anticipation of higher visitor arrivals in conjunction with VM2026 as well as numerous business and leisure events nationwide.
The development of Special Tourism Investment Zones in Johor, Malacca, Negeri Sembilan and Sarawak is expected to attract private investment and further boost tourism activities. The zones will showcase new tourism products focusing on arts, culture, heritage and natural attractions.
The utilities subsector is projected to expand by 1.7%, driven by steady demand from industrial and commercial users for electricity and water services. This is in tandem with the increase in industrial production activities to meet domestic and external demand.
The other services subsector is projected to rise by 4.6%, driven by private health and education segments. In particular, Malaysia Year of Medical Tourism 2026 initiative, emphasising affordability and high-quality healthcare services will attract more healthcare travellers.
The healthcare industry will continue to focus on a targeted marketing campaign, particularly in China, India and Indonesia. Meanwhile, private education is expected to remain robust, anchored by ongoing initiatives to draw in students such as through educational tourism, foreign partnerships and mobility programmes.
The government services subsector is forecast to record a growth of 6.8% in 2026 attributed to the implementation of salary adjustment under Phase 2 of the SSPA.
Expenditure on supplies and services is expected to remain steady following commencement of the 13th Malaysia Plan, 2026-30.
 Business
