KUALA LUMPUR: Malaysia’s gross domestic product (GDP) is expected to grow by 5.2% in 2026 and 4.7% in 2027, amid regional economic uncertainty, according to the International Monetary Fund (IMF).
In its October 2026 Regional Economic Outlook for Asia and the Pacific, themed “Resilient Amid Uncertainty: Can It Be Sustained?”, the IMF highlighted technology-related exports and strong investment in data centres as key contributors to growth across the region.
“Malaysia and Singapore have increased exports as assemblers and packagers of technology products, while strong investment in data centres in China, India, Japan, Indonesia and Malaysia has also contributed to growth,” it said in its report today.
The investment in data centres has generated broader demand for intermediate goods from regional suppliers, including Thailand and Vietnam.
In Malaysia, operational data centre capacity stood at more than 1,000 megawatts (MW), with a further 1,500MW under construction, according to the report.
“As for the composition of services exports, modern services in Malaysia accounted for about 30% of total services exports in 2023, while traditional services made up the remainder.
“Across Asean, services exports embodied in goods exports accounted for 17%, while services exports delivered through a commercial presence accounted for 30%,” the report said.
However, the IMF noted that many services exports in the region remain oriented towards global markets rather than regional markets, particularly modern services, of which only 14%, on average, are exported to countries within the Asia-Pacific region.
On inflation, the report said the pass-through of higher energy prices to both headline and core inflation had remained relatively contained in most advanced and emerging market economies.
“This was partly due to reliance on inventories and the widespread use of price-smoothing measures, including in Malaysia, Korea and Thailand,” it added.
Containing the pass-through of higher energy prices has been the main policy objective, with more than 80% of economies adopting measures to limit the impact on domestic prices, using an average of two to four instruments.
These measures included fuel or utility price freezes and subsidies in Malaysia, alongside fuel tax and duty reductions in Cambodia and Laos, and subsidy-backed fuel price caps in Japan and Thailand.
Targeted support has also complemented broader measures to channel relief to exposed sectors and households. These included credit guarantees or liquidity facilities in Malaysia, India and Singapore.
Demand-side measures, such as work-from-home arrangements, shorter public sector hours and travel restrictions, have also been implemented in Malaysia and several other economies in the region.
On domestic demand, the IMF pointed out that Malaysia's per capita consumption had grown faster than income, with a higher differential than the average among emerging market and developing economies, aided by a notable increase in household borrowing from banks.
For economies where consumption growth was relatively robust, including Malaysia and Thailand, the IMF said policies should focus on strengthening the resilience of consumption, particularly among vulnerable and highly indebted households.