SABAH’s economy is expected to grow by about 2.0 per cent in 2026, driven by services-led GDP expansion as the State continues its post-pandemic recovery.
Masidi said the outlook was underpinned by “stronger fiscal fundamentals and higher investment”, citing the Sabah Economic Outlook 2026–2027 report which pointed to recovering tourism activity, firmer trade flows and expanding labour participation as signs of stable momentum.
He noted that Sabah’s economy grew by 1.1 per cent in 2024, with GDP rising to RM84.3 billion from RM83.4 billion a year earlier, while GDP per capita slipped to RM30,605 from RM31,235 due to a higher population growth rate of four per cent.
“Sabah contributed 5.1 per cent to Malaysia’s total GDP in 2024, making it the seventh-largest contributor nationally, reflecting its continued relevance despite structural and demographic pressures,” he said.
The services sector remained the backbone of the State economy at 52.4 per cent, followed by mining and quarrying at 22 per cent and agriculture at 14.5 per cent, while manufacturing accounted for 7.2 per cent and construction 3.5 per cent.
On trade, Masidi said Sabah recorded a surplus of RM8 billion between January and September 2025, lower than RM11 billion in the same period a year earlier, amid global uncertainties including “reciprocal tariffs by the United States (US) against several major trading partners”.
Exports declined to RM43.7 billion from RM45.7 billion due largely to weaker performance in crude petroleum and processed fertilisers, while imports rose to RM35.6 billion from RM34.6 billion on higher purchases of machinery, transport equipment and manufactured goods.
Despite softer trade numbers, Masidi said domestic demand remained supportive, with inflation easing to 1.1 per cent as of September 2025, below the national rate of 1.4 per cent and 0.2 percentage points lower than a year earlier.
He attributed the moderation in prices to stronger household spending in the first half of 2025, which he said reflected “continued public confidence in Sabah’s economy”.
From a social perspective, Masidi said average monthly household gross income rose to RM6,498 in 2024 from RM6,171 in 2022, while the poverty rate declined from 19.7 per cent to 17.7 per cent over the same period following targeted eradication programmes.
Looking ahead, he said growth in 2026 would be driven mainly by services, with tourism expected to be a key pillar in line with promotional efforts linked to Visit Malaysia Year 2026.
Masidi added that the scheduled opening of Universiti Malaysia Sabah (UMS) Specialist Hospital in January 2026 would strengthen the healthcare sector while enhancing Sabah’s profile in medical tourism and education.
He said the construction sector was set to expand over the next five years through high-impact projects such as Pan Borneo Highway Phase 1B, spanning 388 kilometres, aimed at improving inter-district connectivity and logistics efficiency.
Airport upgrades were also highlighted, with Kota Kinabalu International Airport’s capacity to increase from nine million to 12 million passengers annually and Tawau Airport from 1.5 million to 2.5 million, supporting Sabah’s direct links to 14 international destinations via 117 flights and 447 weekly domestic flights.
Masidi said the ongoing expansion of Sepanggar Bay Container Port, which will raise capacity from 0.5 million to 1.25 million twenty-foot equivalent units (TEUs), alongside these infrastructure projects, was expected to reinforce Sabah’s economic resilience and investment appeal amid a still-challenging global environment.