KUALA LUMPUR: Malaysia is among a handful of Asia-Pacific economies expected to grow faster in 2026 than last year, as its exposure to the artificial intelligence (AI) supply chain helps cushion the impact of weaker regional growth, according to Moody’s Analytics.
In its Asia-Pacific Outlook, Moody’s Analytics described the regional economy as running at “two speeds”, with economies plugged into the AI boom racing ahead while those with weaker links to AI struggle with geopolitical upheaval, trade conflict and policy uncertainty.
“GDP growth in the APAC region will slow in 2026. But economies most deeply integrated into the AI supply chain will buck the trend.
“Taiwan, South Korea, Singapore, and Malaysia will grow faster in 2026 than in 2025, and all but South Korea will outpace China this year,” Moody’s Analytics said.
It said the AI boom continues to drive the region’s exports, with strong demand for semiconductors and other technology products lifting shipments across several Asian economies and helping offset weakness elsewhere.
AI-related investment has also fuelled spending on data centres, with Moody’s Analytics noting that cross-border data centre investment has taken off, with much of the capital originating from the United States and flowing into Asia.
Overall, Moody’s Analytics expects Asia-Pacific economic growth to slow to 4.3% in 2026 from 4.4% in 2025 before easing further to 3.7% in 2027.
However, the region is performing better than Moody’s Analytics had projected at the start of the year, with almost all of the upward revision reflecting the boost from the AI boom.
For Malaysia, Moody’s Analytics noted that the central bank has kept interest rates unchanged and has room to tighten policy if necessary.
This contrasts with several regional economies that have raised rates following higher energy and inflationary pressures stemming from the conflict in the Middle East.
Moody’s Analytics cautioned that strong exports are masking weakness in domestic demand across much of Asia-Pacific. Higher energy and food prices are also adding to inflation and weighing on real incomes.
While AI is supporting growth, Moody’s Analytics warned that the boom is also creating strains, including higher electronics prices, hardware shortages and stretched equity valuations.
It said a downturn in the AI investment cycle could pose a significant risk to economies that have benefited from the boom, particularly if accompanied by higher energy costs and tighter financial conditions.
Other downside risks include a prolonged conflict in the Middle East, renewed trade tensions and a financial market correction.
Moody’s Analytics said Asia-Pacific has so far proven more resilient than expected, but the region remains exposed to a combination of geopolitical, trade and financial risks.
