Malaysia’s economic outlook resilient, S&P says manufacturing, infrastructure and data centres drive growth

KUALA LUMPUR, September 9 — According to S&P Global Ratings, Malaysia's economic outlook remains robust, attributed to robust manufacturing activity, ongoing infrastructure investments, and a swiftly growing data centre sector. Vishrut Rana, S&P Global Ratings' senior economist for Asia Pacific, highlighted Malaysia's consistent economic momentum, primarily due to its position in the regional technology supply chain.

"We continue to observe a robust economic performance in Malaysia, propelled by robust manufacturing of technology and electronic goods," Rana stated during S&P Global Ratings' webinar on Malaysia Credit Outlook: Geopolitics, Data Centres, and the Future of Credit.

Rana pointed out that significant investments in large-scale infrastructure projects, notably in rail and transport sectors, are substantially boosting Malaysia's economy. Additionally, the expansion of data centres has emerged as a key driver of economic growth in recent months. Malaysia's manufacturing sector outpaced overall economic growth in the second quarter, while substantial mining output, especially from gas exports, also contributed to national income.

Inflationary pressures are relatively contained, with headline consumer price inflation staying around two percent, within the central bank's acceptable range. Rana noted that inflation is primarily due to existing subsidies for consumer energy products, which remain in place.

Looking ahead, Rana anticipates Malaysia's growth in 2026 to surpass S&P Global Ratings' earlier forecast of 4.9 percent, driven by stronger-than-expected performance in the first half of the year. He expects inflation to remain stable, mitigating the need for immediate monetary policy adjustments. Rana also noted that the ringgit has remained relatively strong, not significantly impacting export competitiveness, and the labor market conditions are steady.