Kuala Lumpur:The ASEAN+3 Macroeconomic Research Office (AMRO) has revised Malaysia's economic growth forecasts upward, projecting a growth rate of 5.1% for 2026, up from the previous 4.9%, and 4.8% for 2027, compared to the earlier forecast of 4.7%. This adjustment is attributed to strong exports and investments related to artificial intelligence (AI).

According to BERNAMA News Agency, AMRO held Malaysia's inflation forecast steady at 2.0% for 2026, while increasing the 2027 projection to 2.2% from 2.0%. AMRO's chief economist, Dong He, highlighted Malaysia's significant gains from the AI investment cycle, prompting the upgraded growth projections.

During a press conference, Dong He emphasized the importance of ensuring these economic gains are widespread. He suggested that the government utilize the upcoming budget to support these structural improvements during the economic upcycle. AMRO released its ASEAN+3 Financial Stability Report 2026 and the AREO October Update, noting the region's resilience despite the West Asia energy shock.

Looking forward, Dong He expressed optimism about Malaysia's economic outlook, conditional on the country's ability to address challenges, maintain an investment-friendly climate, and engage with key trading partners. He also advised Malaysia to reconsider its subsidy schemes, advocating for a more targeted approach during the AI investment surge.

The AREO report forecasts the ASEAN+3 region's growth at 4.1% in both 2026 and 2027, with inflation rates of 1.6% and 1.7%, respectively. Dong He noted that while the AI investment cycle is broadening regional activities, domestic demand remains inconsistent.

Potential risks to the ASEAN+3 economic outlook include renewed energy disruptions in West Asia, a persistent El Nino, financial market volatility, and increased protectionist measures. These factors could impact the demand for AI-related exports and investments.