Moody’s: AI boom to lift Malaysia’s 2026 growth despite slower Asia-Pacific outlook

MALAYSIA, 25 SEPTEMBER 2026 —

Moody's Analytics said on Wednesday that Malaysia will be among a handful of Asia-Pacific economies to grow faster in 2026 than in 2025, as its deep integration into the artificial intelligence supply chain cushions the impact of a broader regional slowdown.

The assessment, published in the firm's Asia-Pacific Outlook, describes a regional economy running at "two speeds" in which economies plugged into the AI boom are racing ahead while those with weaker links to the technology cycle struggle with geopolitical upheaval, trade conflict and policy uncertainty.

Moody's Analytics expects overall Asia-Pacific growth to slow to 4.3 per cent in 2026 from 4.4 per cent in 2025 before easing further to 3.7 per cent in 2027, but it said the region is performing better than projected at the start of the year, with almost all of the upward revision reflecting the boost from the AI boom.

"GDP growth in the APAC region will slow in 2026. But economies most deeply integrated into the AI supply chain will buck the trend," Moody's Analytics said. "Taiwan, South Korea, Singapore, and Malaysia will grow faster in 2026 than in 2025, and all but South Korea will outpace China this year."

The AI boom continues to drive the region's exports, with strong demand for semiconductors and other technology products lifting shipments across several Asian economies and helping offset weakness elsewhere. AI-related investment has also fuelled spending on data centres, and Moody's Analytics noted that cross-border data centre investment has taken off, with much of the capital originating from the United States and flowing into Asia.

That capital flow has provided a direct tailwind for Malaysia, which has positioned itself as a hub for data centre infrastructure and semiconductor packaging and testing.

For Malaysia specifically, Moody's Analytics noted that the central bank has kept interest rates unchanged and has room to tighten policy if necessary. That stance contrasts with several regional economies that have raised rates following higher energy and inflationary pressures stemming from the conflict in the Middle East. The relative monetary stability gives Malaysian policymakers additional flexibility should inflationary pressures re-emerge or should capital flows shift abruptly.

The report cautioned, however, that strong exports are masking weakness in domestic demand across much of Asia-Pacific. Higher energy and food prices are adding to inflation and weighing on real incomes, a dynamic that could limit the breadth of the recovery even in the AI-linked economies. While AI is supporting growth, Moody's Analytics warned that the boom is also creating strains, including higher electronics prices, hardware shortages and stretched equity valuations.

A downturn in the AI investment cycle could pose a significant risk to economies that have benefited from the boom, particularly if accompanied by higher energy costs and tighter financial conditions, the firm said. Other downside risks include a prolonged conflict in the Middle East, renewed trade tensions and a financial market correction.

Moody's Analytics said Asia-Pacific has so far proven more resilient than expected, but the region remains exposed to a combination of geopolitical, trade and financial risks that could derail the current trajectory.

Related: Moody's Analytics · Malaysia