KUALA LUMPUR: Malaysia’s economy is set to benefit from the global artificial intelligence (AI) investment boom, with the Asean+3 Macroeconomic Research Office (AMRO) raising its 2026 growth forecast as strong semiconductor demand continues to support exports and investment.
In its July update of the Asean+3 Regional Economic Outlook (AREO), AMRO upgraded Malaysia’s gross domestic product (GDP) growth forecast for 2026 to 4.9%, from 4.6% projected in June, while maintaining its 2027 forecast at 4.7%.
Inflation is expected to remain stable at 2% in both years.
The revision follows AMRO’s decision to raise its overall Asean+3 growth forecast to 4.1% in 2026 from 4%, citing stronger-than-expected demand for semiconductors and other AI-related products, alongside lower global commodity prices.
The report said the region’s technology sector continues to be a key growth engine, with exports rising nearly 20% in the first quarter of 2026.
AI-enabling products accounted for almost two-thirds of the increase, while global semiconductor sales nearly doubled during the first five months of the year, driven by AI infrastructure investments and higher memory chip prices.
Malaysia, a major semiconductor and electronics exporter, is expected to benefit from this upcycle.
“Asean+3 has remained resilient, supported by firm domestic demand and its central role in global AI supply chains,” said AMRO chief economist Dong He.
“The impact of the Middle East conflict has also been less severe than initially expected, although elevated energy and input costs continue to pose risks to inflation and industrial activity.”
AMRO said resilient household spending, investment and manufacturing activity have continued to support regional growth despite geopolitical tensions.
Lower commodity price assumptions also prompted the regional surveillance office to cut its 2026 Asean+3 inflation forecast to 1.6% from 1.8%.
However, it warned that Malaysia and other export-oriented economies remain vulnerable to external shocks.
A moderation in global AI investment could significantly weaken growth.
AMRO estimates that if technology investment slows to its 2024 pace, Asean+3 growth could fall to 3.7% in 2026 and 2.5% in 2027, the slowest expansion since the Asian financial crisis, excluding the pandemic years.
Renewed conflict in the Middle East, rising trade protectionism and financial market volatility also pose downside risks.
“The wide range of plausible outcomes underscores the importance of continued vigilance and sound macroeconomic policies,” He said.
“Policymakers will need to respond flexibly to differing domestic conditions and rapidly evolving external risks, particularly the AI cycle and the Middle East conflict.”
