KUALA LUMPUR (April 14): The International Monetary Fund (IMF) has raised its projection for Malaysia's real gross domestic product (GDP) growth to 4.7% for 2026, representing an upward revision of 0.4 percentage point.

According to its April 2026 World Economic Outlook (WEO) released on Tuesday, the IMF also estimated Malaysia’s real GDP growth at 4.3% in 2027.

In 2025, Malaysia recorded a strong growth of 5.2%, supported by resilient domestic demand.

In its January 2026 WEO “Global Economy: Steady amid Divergent Forces”, the IMF previously set Malaysia's 2026 GDP growth at 4.3%.

Bank Negara Malaysia estimates Malaysia’s economy to grow between 4% and 5% this year, with the country’s domestic resilience and diversified export structure continuing to provide buffers to navigate the current external headwinds mainly from the conflict in West Asia.

The IMF projects global growth to be 3.1% in 2026 and 3.2% in 2027, slower than its recent pace of about 3.4% in 2024-2025, and to settle at about that rate in the medium term, slower than its historical (2000-2019) average of 3.7%.

The forecast for 2026 is revised downward by 0.2 percentage point and that for 2027 is unchanged.

It said the relatively modest downward revision to global growth in the reference forecast relative to the January 2026 WEO Update was due to continued tailwinds partially offsetting the negative shocks from the US-Iran conflict, including lower tariffs, pre-existing policy support, and carryover from stronger-than-expected outturns at the end of 2025 and the first quarter of 2026 in some cases.

“This masks significant variation across countries, with lower-income commodity-importing economies being hit particularly hard through higher energy and food prices as well as foreign exchange depreciation,” it said.

The IMF said growth in advanced economies is projected to be 1.8% in 2026 and 1.7% in 2027.

The overall effect on growth in advanced economies from the conflict in West Asia is modest, lowering growth by 0.2 percentage point in 2026 relative to the pre-conflict forecast, thanks to positive terms-of-trade effects in the US and stronger growth momentum and offsetting government measures in Japan, with a large negative effect expected only in some net energy-importing economies, such as the eurozone and the UK.

Meanwhile, in the emerging market and developing economies, growth is expected to fall to 3.9% this year and recover to 4.2% in 2027.

The conflict in West Asia has a varied impact on growth given differential exposure, through geographic proximity, financial flows, remittances, and energy dependencies.

“Overall, it has a larger net impact on growth in emerging market and developing economies compared with advanced economies, lowering growth in 2026 for the former group by 0.3 percentage point relative to the pre-conflict forecast,” it said.

Growth in emerging and developing Asia is also expected to decline to 4.9% in 2026 and to 4.8% in 2027, from 5.5% in 2025.

Meanwhile, global inflation is projected to pause its decline, with headline inflation increasing from 4.1% in 2025 to 4.4% in 2026 before falling back to 3.7% in 2027.

This is a 0.7 percentage point upward revision for 2026 from the figure in the October 2025 WEO, reflecting expected higher energy and food prices.

There is divergence across countries, shaped by the stubborn dynamics in services inflation, which tend to have a larger domestic component and the increasing share of inflation explained by country-specific factors.

World trade volume growth is expected to decline from 5.1% in 2025 to 2.8% in 2026 and increase to 3.8% in 2027. These dynamics reflect front-loading early on and the impact of tariffs, mitigated by adjustments in trade linkages and production chains as time goes by.

On the upside, the IMF said the reference forecast does not include direct effects of artificial intelligence (AI) on productivity, with adoption rates for AI still modest in many sectors.

But the recent surge in AI-related investment and acceleration in the adoption of AI could substantially increase productivity and boost medium-term growth sooner rather than later.

“This could lift global growth by as much as 0.3 percentage point in the near term and by 0.1-0.8 percentage point in the medium term.

“The benefits could be shared across the economy, provided there are complementary policies to contain the potential impact on energy prices by relaxing power supply constraints, initiatives to scale up the necessary critical intermediate inputs, and labour market programmes to manage workforce transitions,” it added.