This is an upward revision of 0.3 percentage points.
According to its January 2026 World Economic Outlook (WEO) update released on Tuesday, the IMF also estimated Malaysia’s real GDP growth at 4.6% in 2025, compared to 5.1% in 2024.
The IMF previously set Malaysia’s GDP at 4.5% in 2025 and 4.0% in 2026.
The report, “Global Economy: Steady Amid Divergent Forces”, said global growth was projected to remain resilient at 3.3% in 2026 and 3.2% in 2027, similar to the estimated 3.3% outturn in 2025.
The forecast marks a small upward revision for 2026 and no change for 2027 from the figures given in the October 2025 WEO.
“This steady performance on the surface results from the balancing of divergent forces. Headwinds from shifting trade policies are offset by tailwinds from surging investment related to technology, including artificial intelligence (AI), more so in North America and Asia than in other regions, as well as fiscal and monetary support, broadly accommodative financial conditions, and adaptability of the private sector,” it said.
The IMF said global headline inflation was expected to decline from an estimated 4.1% in 2025 to 3.8% in 2026 and further to 3.4% in 2027.
The inflation projections are broadly unchanged from those in October and envisage inflation returning to target more gradually in the US than in other large economies.
“The risks to the outlook remain tilted to the downside. The re-evaluation of productivity growth expectations about AI could lead to a decline in investment and trigger an abrupt financial market correction, spreading from AI-linked companies to other segments and eroding household wealth.
“Trade tensions could flare up, prolonging uncertainty and weighing more heavily on activity,” it said.
On the upside, the IMF said activity could be further lifted by AI-related investment and eventually transform into sustainable growth if faster AI adoption translates into strong productivity gains and increased business dynamism.
“Activity could also be supported by a sustained easing in trade tensions. Policies to foster stability and sustainably lift medium-term growth prospects require a keen focus on restoring fiscal buffers, preserving price and financial stability, reducing uncertainty, and implementing structural reforms without further delay,” it said. - FMT
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