S&P RAISES 2026 GDP FORECAST FOR ASIA-PACIFIC TO 4.3 PCT, FOR MALAYSIA TO 4.5 PCT

KUALA LUMPUR, Nov 24 (Bernama) -- S&P Global Ratings has lifted its 2026 gross domestic product (GDP) growth forecast for Asia-Pacific to 4.3 per cent from 4.0 per cent, with the Malaysian economy now projected to grow at a faster pace of 4.5 per cent.

In its Economic Outlook Asia-Pacific First Quarter (1Q) 2026: Signs of Relief report, S&P cited resilient demand, stronger technology exports and reduced tariff uncertainty for the improved regional outlook.

“We think a tentative thaw in United States (US)-China ties and, in many economies, resilient domestic demand should help Asia-Pacific growth hold up in 2026,” the credit rating agency said.

According to the report’s tables, Malaysia’s GDP growth has been revised upwards by 0.2 percentage points (ppts) to 4.5 per cent in 2026, with consumer inflation at 1.9 per cent and policy rate steady at 2.75 per cent.

For China, S&P raised its 2026 GDP forecast to 4.4 per cent from 4.0 per cent previously due to a reduction in US tariffs on the country and the economic resilience shown in the third quarter (3Q) of 2025.

For Asia, excluding China, the rating agency said both exports and domestic demand generally held up well through 3Q 2025, supported by strong shipments of technology products such as semiconductors.

“We still expect a slowdown in much of the region in 2026, stemming from the US tariffs. But we have revised up our export forecasts on an improved outlook for tech exports and the relatively favourable outcome of the US-China negotiations.

“In all, we have raised our 2025 GDP growth forecasts for Asia-Pacific, excluding China, by 0.2 ppts to 4.4 per cent and the 2026 one by 0.2 ppts to 4.2 per cent,” it added.

However, S&P said that it expects uncertainty around US tariffs to remain in 2026, in part because of indications that the US administration may use tariffs for political purposes although visibility has improved.

Meanwhile, the rating agency said Asia-Pacific central banks have lowered their policy rates by an average 65 basis points (bps) so far in 2025, following an average cut of 40 bps in 2024.

“We see little scope for further cuts, chiefly because policy rates have for the most part already descended close to our estimates of neutral policy interest rates.

“Among key factors influencing monetary policy, inflation is not currently a problem in Asia-Pacific. We expect consumer inflation to mostly remain low amid moderate energy prices and redirection of exports away from the US,” it added.

In general, S&P said, Asia-Pacific currencies are expected to strengthen slightly against the US dollar through to the end of 2026.

-- BERNAMA