AMRO Raises Malaysia Growth Forecasts as AI Investment Lifts Outlook

The ASEAN+3 Macroeconomic Research Office (AMRO) has raised its growth forecast for Malaysia to 5.1 per cent in 2026 from 4.9 per cent earlier, and to 4.8 per cent in 2027 from 4.7 per cent, according to reporting on its October regional outlook update. The upgrade was linked to strong artificial intelligence-related exports and investment.

AMRO kept Malaysia’s 2026 inflation forecast at 2.0 per cent and nudged the 2027 inflation view to 2.2 per cent from 2.0 per cent. Chief economist Dong He said Malaysia is among regional economies that have benefited from the current AI investment cycle.

What AMRO emphasised

• Gains from the AI upcycle should spread more broadly through the economy
• The upcoming budget is a chance to address structural issues while conditions are supportive
• Subsidy design could move toward a more targeted structure
• Regional growth remains sensitive to AI-related demand swings

“What is important in this kind of environment is for these gains to be broadly propagated towards the economy,” Dong He said, as quoted in The Star’s Bernama-based report.

What this means for Malaysian readers

For SMEs and workers, a firmer growth print is encouraging, but the detail that matters is whether AI and data-centre investment translate into local suppliers, skills, and services — not only construction and imported equipment. Higher projected inflation for 2027 is modest in the forecast, yet energy and logistics costs from wider geopolitical shocks remain a household and SME risk AMRO also flagged for the region.

Business owners watching Budget 2027 may hear more about targeted support and investment-friendly settings. Employees in E&E, logistics, and digital services sit closest to the AI export story; consumer-facing SMEs still depend on domestic demand, which AMRO described as uneven across ASEAN+3.

Treat forecasts as a weather map, not a guarantee. The practical takeaway is to watch order books, hiring, and input costs over the next quarter rather than celebrate a decimal-point upgrade alone.

Reading the regional backdrop

AMRO’s wider ASEAN+3 update still projected the regional bloc to grow about 4.1 per cent in both 2026 and 2027, with low single-digit inflation. Dong He noted that energy and industrial-input disruptions proved less severe than many feared, yet higher energy and logistics costs continued to weigh on households and businesses. That split — strong tech-linked exports versus uneven domestic purchasing power — is familiar to Malaysian retailers and F&B operators.

Downside risks listed in the outlook include renewed West Asia energy shocks, a more persistent El Niño, financial-market volatility, and further protectionist measures. Malaysian planners cannot control those variables, but SMEs can stress-test budgets against another freight or fuel spike.

For investors, the upgrade is incremental rather than dramatic. The useful signal is AMRO’s explicit link between Malaysia’s forecast and the AI investment cycle — a theme echoing local broker notes on semiconductors and data centres the same week.

Source: The Star