Malaysia's GDP projected to grow 5.2% in 2026, says IMF

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Malaysia GDP forecast for 2026

Highlights

The IMF projects Malaysia's GDP growth at 5.2% in 2026, driven by technology exports and data centre investment, with operational capacity exceeding 1,000 megawatts.
Modern services accounted for around 30% of Malaysia's services exports in 2023, while data centre capacity under construction exceeds 1,500 megawatts.
Fuel price controls and subsidies are containing inflation, but the IMF urges policies to focus on strengthening consumption among vulnerable and highly indebted households.

This article was translated from the original. Read the original version by our correspondent here.

Technology exports and data centre investment drive growth

As reported by The Edge Malaysia, citing the International Monetary Fund's October 2026 edition of the Regional Economic Outlook Asia and the Pacific, Malaysia's growth continues to be supported by technology-related exports and strong investment in data centres. The IMF said Malaysia and Singapore are increasing exports as assemblers and packagers of technology products, while data centre investment in China, India, Japan, Indonesia and Malaysia is also contributing to regional growth.

According to the report, data centre investment is also creating broader demand for intermediate goods from regional suppliers, including Thailand and Vietnam. In Malaysia, operational data centre capacity exceeds 1,000 megawatts, while another 1,500 megawatts are under construction.

The IMF also said modern services accounted for around 30% of Malaysia's total services exports in 2023, with traditional services making up the remainder. Across ASEAN, services exports embodied in goods exports accounted for 17%, while services exports delivered through commercial presence reached 30%.

Inflation contained, but consumption resilience in focus

The IMF said the pass-through of higher energy prices to headline and core inflation has remained relatively contained in most advanced and emerging market economies. This was partly supported by the use of inventories and widespread price-smoothing measures, including in Malaysia, South Korea and Thailand.

Measures to curb the impact of energy prices have become a key policy objective in the region, with more than 80% of economies implementing instruments to limit the effect on domestic prices. For Malaysia, these measures include fuel or utility price freezes and subsidies, as well as credit guarantees or liquidity facilities targeted at vulnerable sectors and households.

On domestic demand, the IMF noted that Malaysia's per capita consumption is growing faster than income, with a wider gap than the average for emerging market and developing economies, aided by a significant increase in household borrowing from banks. For economies recording relatively strong consumption growth, including Malaysia and Thailand, the IMF said policies should focus on strengthening consumption resilience, particularly among vulnerable and highly indebted households.

In our previous coverage of the approval of 27 data centre projects under the data centre task force as of July 2026, we examined the RM225.97 billion investment value and the concentration of projects in Johor, Selangor and Negeri Sembilan. The article also outlined the impact on high-skilled jobs, the minimum 30% local content requirement and regular monitoring of project implementation.

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