Penang: Despite rising geopolitical uncertainties, a sustained global semiconductor upcycle is expected to drive Penang's economic growth through 2026.
According to BERNAMA News Agency, OCBC senior ASEAN economist Lavanya Venkateswaran noted the resilience of Penang's electrical and electronics (EandE) sector, although the West Asia conflict presents risks that could potentially affect transportation and logistics, impacting the semiconductor supply chain. Venkateswaran highlighted that Penang's GDP growth has consistently surpassed the national average since the pandemic. With the global semiconductor upcycle anticipated to continue through 2026, she projects ongoing support for Penang's gross domestic product (GDP) growth.
On the export front, Venkateswaran mentioned that Malaysia's EandE market, primarily focused on ASEAN, the United States, and China, is expected to maintain its growth momentum. However, exports to the US may be affected by tariff policies. While manufacturing remains the cornerstone of the state's economy, she emphasized the significant contribution of the services sector, including wholesale and retail trade, finance, and insurance, to the national GDP. The tourism sector is also seen as a potential catalyst for growth, bolstered by the 'Visit Malaysia 2026' program.
Venkateswaran pointed out the authorities' concerted efforts to elevate the semiconductor sector's position in the value chain while enhancing intra-city connectivity and promoting tourism for both holiday and medical purposes. These initiatives are expected to provide some counter-cyclical resilience to the state's economic growth in the coming years.
Regarding the global energy crisis, Venkateswaran described Malaysia as one of the more resilient ASEAN economies in terms of price and volume shocks. However, she acknowledged expected ripple effects in sectors such as fertilizer, plastics, and logistics. Addressing concerns about whether Penang-based exporters face a margin squeeze, she noted that it might be premature to fully assess the impact of higher oil prices. Nevertheless, she warned that Penang's economy could be vulnerable to oil price shocks due to the manufacturing sector's importance to GDP growth, with downside risks intensifying if geopolitical tensions remain high.