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HSBC Private Bank is maintaining its 2026 growth forecast for Malaysia at 4.5%, with expectations for a further rise to 4.7% in 2027. This is slightly down from the 5.2% growth we saw last year.
At the firm’s third-quarter investment outlook briefing yesterday, Chief Investment Officer for Asia, Desmond Kuang, attributed this resilience to Malaysia’s strategic role in the artificial intelligence (AI) supply chain and a strong pipeline of data centre investments. These factors act as vital buffers, helping to insulate the economy from global instability and the ongoing Middle East conflict.
“Malaysia’s powerful semiconductor testing and assembly infrastructure is feeding into the regional AI trade,” Kuang explained. He pointed out that the established flow of AI hardware – from Southeast Asia to North Asia and out to the global market – remains on a steady path, serving as a primary pillar for the country’s exports.
Willem Sels, the firm’s Global Chief Investment Officer, shared this positive outlook, noting that Malaysia’s resilience is further bolstered by its status as a net oil exporter.
Looking ahead, Kuang emphasized that Malaysia is well-positioned to lead the regional data centre market, which will continue to underpin economic stability. He added that the bank’s growth projections have already factored in both this construction cycle and the recent surge in export performance.
To put this in perspective, growth projections for the region remain varied: Indonesia is looking at around 5%, Singapore is targeting 3.5%, Vietnam is eyeing a strong 6.8%, while Thailand is expected to see more modest growth between 1.6% and 2.0%.
On the inflation front, the bank has nudged its 2026 forecast for Malaysia up to 2.5%, compared to its previous estimate of 2.1%. However, Kuang does not expect this to prompt an interest rate hike from Bank Negara Malaysia.
He described the inflation as “rather tempered” and manageable, noting that the local economy continues to show greater resilience than its regional peers.
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