Kuala lumpur: The International Monetary Fund (IMF) has raised its projection for Malaysia's real gross domestic product (GDP) growth to 4.3 percent for both 2026 and 2027, representing an upward revision of 0.3 percentage points.
According to BERNAMA News Agency, the IMF's January 2026 World Economic Outlook (WEO) update, titled 'Global Economy: Steady amid Divergent Forces,' also estimated Malaysia's real GDP growth at 4.6 percent in 2025, compared to 5.1 percent growth in 2024. The IMF had previously set Malaysia's 2025 GDP at 4.5 percent and 4.0 percent in 2026.
The report stated that global growth is projected to remain resilient at 3.3 percent in 2026 and at 3.2 percent in 2027, rates similar to the estimated 3.3 percent outturn in 2025. The forecast marks a small upward revision for 2026 and no change for 2027 compared with that in the October 2025 WEO.
'This steady performance on the surface results from the balancing of divergent forces. Headwinds from shifting trade policies are offset by tailwinds from surging investment related to technology, including artificial intelligence (AI), more so in North America and Asia than in other regions, as well as fiscal and monetary support, broadly accommodative financial conditions, and adaptability of the private sector,' it said.
The IMF stated that global headline inflation is expected to decline from an estimated 4.1 percent in 2025 to 3.8 percent in 2026 and further to 3.4 percent in 2027. The inflation projections are broadly unchanged from those in October and envisage inflation returning to target more gradually in the United States than in other large economies.
The report also highlighted that risks to the outlook remain tilted to the downside. It noted that re-evaluation of productivity growth expectations regarding AI could lead to a decline in investment and trigger an abrupt financial market correction, spreading from AI-linked companies to other segments and eroding household wealth. Trade tensions could flare up, prolonging uncertainty and weighing more heavily on activity.
Meanwhile, on the upside, the IMF suggested that activity could be further lifted by AI-related investment and eventually transform into sustainable growth if faster AI adoption translates into strong productivity gains and increased business dynamism. Activity could also be supported by a sustained easing in trade tensions. Policies to foster stability and sustainably lift medium-term growth prospects require a keen focus on restoring fiscal buffers, preserving price and financial stability, reducing uncertainty, and implementing structural reforms without further delay.