Data centres to keep Malaysia’s growth steady as IMF leaves forecast intact

KUALA LUMPUR (July 9): Data centre activity and the broader global technology upcycle are expected to keep Malaysia’s economic growth steady this year, even as the world economy faces pressure from higher energy prices and geopolitical risks, according to the International Monetary Fund (IMF).

In its July 2026 World Economic Outlook Update, the IMF kept Malaysia’s 2026 gross domestic product growth forecast unchanged at 4.7%, before easing to 4.3% in 2027.

The fund said Malaysia would benefit from data centre activity and the upturn in the global technology cycle, as demand for artificial intelligence-related hardware and infrastructure continues to support economies plugged into the technology value chain.

“In Malaysia, the economy is projected to grow at a rate of 4.7% in 2026, benefitting from data centre activity and the upturn in the global technology cycle,” IMF said in its latest report.

Malaysia was also named among the top four net exporters of AI-related hardware, alongside South Korea, Taiwan and Thailand. The IMF said these economies saw stronger-than-expected growth in the first quarter, helped by the technology-led boost.

Globally, the IMF projected growth to slow to 3% in 2026 from 3.5% in 2025, before picking up to 3.4% in 2027. It said the drag from the Middle East war is being partly offset by stronger demand from the global technology cycle, especially AI adoption.

The IMF said countries exposed to technology-related trade and investment are likely to perform better, while energy importers with limited participation in the technology supply chain could face weaker activity.

Still, the fund warned that risks remain tilted to the downside, mainly from renewed conflict in the Middle East, higher commodity prices, supply-chain disruptions, trade fragmentation and a possible correction in AI-driven market expectations.

Global inflation is expected to rise to 4.7% in 2026 from 4.1% in 2025, before easing to 3.9% in 2027, as higher energy and food prices stall the earlier disinflation trend.

The IMF said energy prices are projected to remain above pre-war levels, with crude oil prices expected to rise by nearly one-third in 2026 from a year earlier, while natural gas and fertiliser prices are also seen higher.

For policymakers, the fund said priorities include preserving price stability, rebuilding fiscal buffers and investing in energy security, digital infrastructure and skills to better capture gains from AI and digitalisation.

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