World Bank Raises Growth Forecasts for Malaysia and Vietnam

The World Bank Group raised its 2026 economic growth forecasts for both Malaysia and Vietnam, attributing the upgrades to a global surge in demand for artificial intelligence (AI) and high-tech exports. Malaysia's forecast was increased by 0.7 percentage points to 5.1 percent, following a growth acceleration from 5.4 percent in the first quarter of 2026 to 6 percent in the second.

Vietnam's forecast saw a larger increase of 1.1 percentage points to 7.4 percent, driven by strong manufacturing and AI-related goods. The Government of Vietnam is targeting double-digit growth for the full year after the General Statistics Office of Vietnam reported a 9.95 percent expansion in the third quarter. However, the World Bank warns that Vietnam faces consumer price inflation projected to average 4.2 percent in 2026 due to rising utility, housing, and fuel costs.

Economists warned that Malaysia's reliance on the AI sector creates significant vulnerability, as AI-related products accounted for over 70 percent of export growth in early 2026. The bank noted that a slowdown in U.S. growth or global AI investment could trigger capital outflows and weaken trade. In Vietnam, while generative AI use is high, the World Bank reported that productivity gains are currently hindered by data privacy concerns, high costs, and skills shortages.