SINGAPORE: The ASEAN+3 Macroeconomic Research Office (AMRO) has raised its economic growth forecast for Malaysia to 5.1 per cent in 2026 from 4.9 per cent previously, and to 4.8 per cent in 2027 from 4.7 per cent, driven by robust artificial intelligence (AI)-related exports and investment.
In its October update of the ASEAN+3 Regional Economic Outlook (AREO), AMRO maintained Malaysia’s inflation forecast at 2.0 per cent for 2026, while raising its projection for 2027 to 2.2 per cent from 2.0 per cent previously.
AMRO chief economist, Dong He said Malaysia is one of the countries in the region that greatly benefitted from the current AI-related investment cycle, which led to the upgraded growth projections.
"What is important in this kind of environment is for these gains to be broadly propagated towards the economy. So this is a good opportunity for the government to make use of the (upcoming) budget to ensure that these structural forces are taken care of in this upcycle," he said in a press conference on Monday.
AMRO today launched its ASEAN+3 Financial Stability Report 2026 and the AREO October Update, highlighting the region’s solid performance despite the West Asia energy shock.
He emphasised that AMRO remains optimistic about Malaysia’s economic outlook, provided the country addresses key challenges, maintains its investment-friendly environment, and continues to engage with major trading partners to foster a stable economic environment.
Additionally, he also encouraged Malaysia to take the opportunity of the current AI-investment upcycle to review the country's subsidy schemes and move towards a more targeted structure.
Meanwhile, the AREO report projected the ASEAN+3 region to grow by 4.1 per cent in both 2026 and 2027, with inflation forecast at 1.6 per cent and 1.7 per cent, respectively.
According to He, the AI investment cycle in ASEAN+3 is supporting a widening range of regional activities, although domestic demand remains uneven.
"Disruptions to energy supplies and industrial inputs proved less severe than many had feared, limiting the drag on production. However, higher energy and logistics costs continued to weigh on household purchasing power and business costs,” he noted.
Looking ahead, the growth outlook for ASEAN+3 is particularly sensitive to AI-related demand, which could either strengthen or weaken exports and investment.
Additional downside risks include renewed West Asia energy disruptions and a more persistent El Nino, alongside financial-market volatility and further protectionist measures, according to the AREO. - Bernama
