KUALA LUMPUR – The International Monetary Fund (IMF) has raised Malaysia’s growth outlook, projecting real GDP expansion of 4.6% in 2025, followed by 4.3% in both 2026 and 2027.
According to its January 2026 World Economic Outlook (WEO) update, “Global Economy: Steady amid Divergent Forces”, the IMF said Malaysia’s 2025 forecast is up from the previously estimated 4.5%, while the 2026 figure marks an upward revision of 0.3 percentage points from 4.0%.
Globally, growth is expected to remain resilient at 3.3% in 2026 and 3.2% in 2027, similar to the estimated 3.3% outturn in 2025.
The IMF noted: “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.”
Inflation is forecast to ease gradually, with global headline inflation declining from 4.1% in 2025 to 3.8% in 2026 and 3.4% in 2027. The IMF said: “The inflation projections are also broadly unchanged from those in October and envisage inflation returning to target more gradually in the United States than in other large economies.”
Risks, however, remain skewed to the downside. “The re-evaluation of productivity growth expectations about 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,” the report warned.
On the upside, the IMF added: “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.” – January 21, 2026