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MALAYSIA’S economic growth is expected to remain resilient this year, supported by expanding data centre (DC) activity and the broader global technology upcycle, despite mounting pressure from higher energy costs and geopolitical uncertainties, according to the International Monetary Fund (IMF).
In its July 2026 World Economic Outlook Update, the IMF maintained Malaysia’s 2026 gross domestic product (GDP) growth forecast at 4.7 per cent, before projecting a moderation to 4.3 per cent in 2027.
The fund said Malaysia was among the economies benefiting from increased demand linked to artificial intelligence (AI), particularly through investments in data centres, digital infrastructure and technology-related supply chains.
“In Malaysia, the economy is projected to grow at a rate of 4.7% in 2026, benefitting from data centre activity and the upturn in the global technology cycle,” the IMF said in its latest report.
Malaysia was also identified as one of the world’s top four net exporters of AI-related hardware, alongside South Korea, Taiwan and Thailand. The IMF said these economies recorded stronger-than-expected growth in the first quarter, supported by the ongoing technology-driven expansion.
The IMF said global economic growth was expected to slow to 3 per cent in 2026 from 3.5 per cent in 2025, before improving slightly to 3.4 per cent in 2027.
While the prolonged Middle East conflict is weighing on global activity, the IMF said the impact was being partly offset by stronger demand generated by the global technology cycle, particularly the rapid adoption of AI.
The fund noted that economies with strong exposure to technology-related trade and investment were likely to record better performance, while energy-importing countries with limited participation in technology supply chains could face weaker growth prospects.
However, the IMF warned that global economic risks remained tilted towards the downside, citing possible escalation of conflicts in the Middle East, higher commodity prices, supply chain disruptions, increased trade fragmentation and a potential correction in AI-driven market expectations.
Global inflation is forecast to rise to 4.7 per cent in 2026 from 4.1 per cent in 2025, before easing to 3.9 per cent in 2027, as higher energy and food prices slow the pace of global disinflation.
The IMF said energy prices were expected to remain above pre-conflict levels, with crude oil prices projected to increase by almost one-third in 2026 compared with the previous year. Natural gas and fertiliser prices were also expected to remain elevated.
For policymakers, the IMF highlighted the need to maintain price stability, rebuild fiscal buffers and strengthen investments in energy security, digital infrastructure and workforce skills to maximise the benefits of AI adoption and digital transformation.
The outlook reinforces Malaysia’s strategic focus on expanding its digital economy, attracting data centre investments and strengthening its position within global technology supply chains as a driver of future economic growth. - July 9, 2026
