Kuala Lumpur (VNA) – The Asian Development Bank (ADB) has raised its 2026 and 2027 economic growth forecasts for Malaysia to 4.9% and 4.7%, respectively, driven by positive signs in the country's technology exports.
The figures were upgraded from the 4.6% for 2026 and 4.5% for 2027 predicted in July.
The upward forecast revision for Malaysia is in line with the general trend among developing economies in Southeast Asia, following the region's higher-than-expected growth in the first half of 2026.
In its Asian Development Outlook (ADO) September 2026 report, the ADB said Malaysia’s inflation will likely remain at 2.0% through the rest of 2026 and in 2027. The prediction for 2027 increased 0.1 percentage point from the July forecast.
The bank also raised its inflation forecast for the region from 2.9% to 3.3% due to expectations of higher inflation in some Southeast Asian countries amid rising energy costs that continue to impact domestic prices. In Malaysia and Indonesia, the intensity and duration of El Niño are expected to continue to exert upward pressure on prices.
ADB President Masato Kanda noted that the region remains resilient, but risks are growing. He said a strengthening El Niño with drier conditions means smaller harvests and reduced hydropower, pushing food and energy prices higher, and hitting the most vulnerable the hardest.
The ADB report identifies two main risks to the region's growth and inflation outlook. The first is escalating conflict, particularly a broadening of the Middle East conflict and an intensification of Russia–Ukraine war, which could keep global energy prices elevated and volatile and spill over to other commodities.
The second risk is the possibility of a very strong El Niño, projected to last until the end of the first quarter of 2027, which could increase energy demand, lower agricultural output, and drive up fuel and food prices.
The ADB also noted that a sharp correction in AI-related equity valuations, tighter financial conditions, and renewed trade policy uncertainties could add further risks to growth prospects.
For the region as a whole, the bank slightly raised its 2026 economic growth forecast for the developing Asia-Pacific region from 4.9% in July to 5%, and raised its forecast for 2027 to 5.1%. Its lowered its 2026 inflation forecast for the region from 4.3% to 4.2%, but raised its 2027 inflation forecast from 3.4% to 3.5%./.
