Malaysia’s economic growth is expected to remain resilient in 2026, supported by the expansion of data centres and the ongoing global technology upcycle, according to the International Monetary Fund (IMF).
In its July 2026 World Economic Outlook Update, the IMF maintained Malaysia’s economic growth forecast at 4.7% for 2026, before expecting growth to moderate to 4.3% in 2027.
The IMF said Malaysia is benefiting from rising global demand for artificial intelligence (AI), semiconductor-related products and digital infrastructure, which are strengthening the country’s position within the global technology value chain.
Data Centre Expansion Becomes Key Economic Driver
The IMF highlighted data centre activities as one of the major contributors supporting Malaysia’s economic performance.
The rapid growth of AI adoption globally has increased demand for data storage, cloud computing infrastructure and high-performance computing facilities. Malaysia, with its strategic location and established technology ecosystem, has attracted significant investment in data centres and related industries.
The expansion of data centres is expected to create positive spillover effects across various sectors, including:
Industrial property and land demand.
Construction and engineering services.
Power generation and utilities.
Logistics and supporting technology services.
Malaysia was also identified as one of the top four net exporters of AI-related hardware, alongside South Korea, Taiwan and Thailand.
These economies benefited from stronger technology demand, particularly in semiconductor production and AI-related supply chains.
Global Economy Faces Uncertainty Despite Technology Growth
While the technology sector continues to support economic activity, the global economy remains affected by geopolitical tensions, higher energy costs and trade uncertainties.
The IMF projected global economic growth to slow from 3.5% in 2025 to 3.0% in 2026, before recovering slightly to 3.4% in 2027.
The fund noted that growth from AI adoption and technology investment is helping to offset some of the negative effects caused by conflicts, rising commodity prices and weaker global trade conditions.
Countries with strong technology sectors and digital infrastructure are expected to have better growth prospects, while economies with limited technology exposure may face greater challenges.
Inflation and Energy Costs Remain Key Risks
The IMF warned that global inflation pressures could remain elevated due to higher energy and commodity prices.
Global inflation is expected to rise to 4.7% in 2026, compared with 4.1% in 2025, before easing to 3.9% in 2027.
The fund expects energy prices to remain above previous levels, with crude oil, natural gas and fertiliser prices facing upward pressure due to geopolitical uncertainties.
Other risks highlighted by the IMF include:
Renewed global conflicts.
Supply chain disruptions.
Trade restrictions.
Volatility in AI-related investments.
Higher commodity prices.
Malaysia Needs Strong Infrastructure and Talent Development
The IMF advised countries to strengthen economic resilience by focusing on long-term investments rather than short-term solutions.
Key areas of focus include:
Strengthening energy security.
Expanding digital infrastructure.
Developing skilled technology talent.
Encouraging innovation and AI adoption.
Maintaining stable economic policies.
These measures will help Malaysia capture more opportunities from digital transformation while reducing vulnerability to external economic shocks.
Growing Opportunities for Malaysia’s Industrial and Property Sector
The continued growth of data centres presents significant opportunities for Malaysia’s industrial and property markets.
Demand for suitable industrial land, high-specification facilities, warehouses, power infrastructure and supporting developments is expected to increase as more technology companies expand their operations.
Locations with strong infrastructure, reliable electricity supply and connectivity advantages are likely to benefit the most, particularly areas such as Johor, Selangor and Negeri Sembilan.
What I Learned
The IMF’s latest outlook shows that Malaysia’s future economic growth will increasingly depend on technology-driven industries rather than traditional sectors alone. Data centres and AI-related investments are becoming important growth engines, creating new opportunities for industrial property, construction and infrastructure development.
However, successful growth requires more than attracting investment. Malaysia must ensure sufficient electricity capacity, water resources, infrastructure readiness and skilled manpower to support the expansion of the digital economy.
For investors and property players, the data centre boom represents a long-term opportunity, but sustainable development planning will be crucial to balance economic growth with environmental considerations and infrastructure capacity.
Yao Mu Realty, based in Kuala Lumpur, Malaysia, specializes in industrial real estate for factories and land, delivering professional and efficient solutions.
Posted by Yao Mu Realty Sdn Bhd on 9 Jul 26
Malaysia