S&P Global Ratings has upgraded Malaysia’s economic growth forecast for 2026 to 5.5% from 4.9% previously, supported by strong technology exports and resilient domestic demand despite elevated global energy prices.
In its latest report, Economic Outlook Asia-Pacific Q4 2026: Exports, Domestic Demand Will Shore Up Growth, the ratings agency also raised Malaysia’s 2027 growth projection to 5.1% from 4.7%, reflecting expectations of sustained economic momentum.
The revised forecasts represent upward adjustments of 0.6 percentage points for 2026 and 0.4 percentage points for 2027, following Malaysia’s 5.2% GDP expansion in 2025.
AI Boom And Domestic Demand Support Malaysia’s Growth
S&P Global said the global artificial intelligence (AI) investment boom continues to support Asia-Pacific’s technology exports, particularly in economies with established electronics and semiconductor manufacturing industries.
The agency noted that Malaysia was among the regional economies recording strong consumption growth, providing an additional buffer against external uncertainties.
Across Asia-Pacific, exports remained a key growth driver, with average year-on-year growth in US dollar terms reaching 30% in the three months through July.
Although technology export growth is expected to peak soon, S&P Global anticipates demand will remain robust over the next 12 months.
The agency also expects the economic benefits of the technology export boom to increasingly support domestic investment and consumption towards the end of 2026 and into 2027.
Malaysia’s Inflation Seen At 1.8%, OPR To Remain At 2.75%
Despite higher global energy prices, S&P Global expects Malaysia’s inflation to remain relatively contained.
The agency forecasts average consumer price inflation of 1.8% in 2026 and 1.9% in 2027, compared with 1.4% in 2025.
It also projects Bank Negara Malaysia’s Overnight Policy Rate (OPR) to remain unchanged at 2.75% through 2027.
Malaysia’s unemployment rate is expected to ease to 2.9% in 2026 from 3% last year and remain at that level in 2027.
On the currency front, S&P Global forecasts the ringgit at RM4.04 against the US dollar by end-2026, strengthening marginally to RM4.01 by end-2027.
Asia-Pacific Growth Forecast At 4.6%
For the broader Asia-Pacific region, S&P Global raised its 2026 growth forecast by 0.2 percentage points to 4.6%, before moderating to 4.4% in 2027.
China’s economy is projected to expand by 4.3% in both years, weighed down by weak household demand, declining property activity and subdued investment.
Vietnam is forecast to grow by 8% in 2026, followed by Malaysia at 5.5%, Singapore at 5.2% and Indonesia at 5.1%.
S&P Global cautioned that elevated energy prices, tighter US monetary policy and a potential slowdown in AI-related investment remain key risks to the regional outlook.
The agency expects global oil prices to remain elevated in the coming months, with a gradual return towards pre-crisis levels only in early 2028.
It added that a slowdown in AI investment, particularly among major US technology companies, could weaken Asia’s technology export momentum.
Nevertheless, S&P Global expects generally resilient domestic demand and continued integration into global technology supply chains to support Asia-Pacific growth through 2027.
