While much of the developing world is having its 2026 growth outlook cut because of the Strait of Hormuz disruption, Malaysia just went the other way. Maybank Investment Banking Group has upgraded its 2026 GDP growth forecast for Malaysia to 4.9 percent, up from a previous estimate of 4.4 percent, alongside a lift to its broader ASEAN-6 regional growth projection to 4.7 percent.

What’s Driving the Upgrade

The revision rests on a combination of resilient manufacturing, stronger net exports, an AI-driven technology upcycle, and higher commodity prices. Maybank IBG’s own research notes that Malaysia’s April and May economic indicators point to another quarter of growth above 5 percent, with the outlook for the second half of the fiscal year remaining healthy, particularly given sustained investment approval momentum in technology, renewable energy, industrial real estate and infrastructure.

That momentum was on full display at Maybank’s flagship Invest ASEAN conference, held in Singapore on July 7–8, which brought together roughly 200 institutional investors and prime brokerage clients managing a combined $23 trillion in assets under management. The conference, now in its 13th edition, featured 54 companies — including a sovereign wealth fund — from Malaysia, Singapore, Thailand, Indonesia, the Philippines and Vietnam, representing a combined market capitalisation of $553 billion.

The Themes Institutional Capital Is Chasing

Maybank IBG chief executive Michael Oh-Lau identified three dominant themes shaping investor conversations at the summit: energy transition, supply chain reconfiguration, and AI-led digital transformation. He noted that this year’s attendance surpassed expectations, highlighting sustained interest from both global and local investors in ASEAN as a region demonstrating resilience amid global uncertainty.

That resilience is regional, not just Malaysian. The Asian Development Bank’s July outlook shows Malaysia’s growth forecast unchanged at 4.6 percent in 2026 and 4.5 percent in 2027, even as the ADB flags that the Middle East conflict is weighing more heavily on developing Asia than previously anticipated, with regional growth moderating to 4.9 percent this year from 5.5 percent in 2025.

The Johor-Singapore Corridor Is Doing Real Work

A specific structural driver behind Malaysia’s outperformance is the Johor-Singapore Special Economic Zone, which attracted 19 billion dollars in approved investments in 2025 alone, with more than 57 percent of cumulative approved projects already entering implementation. Malaysia’s Minister of Economy, Akmal Nasrullah, confirmed momentum continued into the first quarter of 2026, with a further $1.3 billion in newly approved investments — notable given the zone’s master plan has not yet been formally unveiled.

Investor appetite for the corridor keeps building: the Invest Malaysia Facilitation Centre Johor handled 285 investment enquiries worth a combined $18.5 billion during just the first five months of 2026.

What is Malaysia’s GDP growth forecast for 2026?

Maybank Investment Banking Group has raised its 2026 GDP growth forecast for Malaysia to 4.9%, up from 4.4%, citing resilient manufacturing, stronger exports, an AI-driven technology upcycle and continued investment momentum in the Johor-Singapore Special Economic Zone.

Currency and Inflation Backdrop

Malaysia’s growth upgrade is occurring against a broadly benign inflation backdrop relative to regional peers, with the ADB’s July revisions lifting Malaysia’s 2026 inflation forecast only modestly, up 0.2 percentage points to 2 percent — among the lowest in ASEAN. That combination of above-5-percent growth momentum with contained inflation is precisely what has drawn institutional capital back to Kuala Lumpur and the Johor corridor even as energy-driven cost pressures weigh on much of the rest of developing Asia.

The Investment Case Going Forward

For allocators weighing Southeast Asian exposure, Malaysia’s story in mid-2026 is less about a single catalyst and more about compounding tailwinds — an AI-driven technology upcycle, a fast-maturing special economic zone anchored to Singapore’s capital base, and export resilience holding up even as regional peers absorb the Hormuz-driven energy shock. The Invest ASEAN turnout suggests institutional money agrees.

China’s economy has just delivered its weakest quarterly result since the depths of the pandemic recovery, and the number that matters most isn’t the headline growth figure — it’s what Beijing does, or doesn’t do, about it.

The Numbers Behind the Miss

Gross domestic product expanded 4.3 percent in the April-to-June period, according to the National Bureau of Statistics, missing economists’ forecast of 4.5 percent and slowing sharply from 5 percent in the first quarter. Crucially, that print came in below Beijing’s own full-year target range of 4.5 to 5 percent — described by CNN as the least ambitious goal Beijing has set in decades — and represents a rare public admission of economic weakness for a government that has long leaned on infrastructure investment and exports to mask domestic softness.

An accelerating slide in fixed investment, alongside subdued consumption, is doing most of the damage. Reuters polling ahead of the release had already flagged that weak domestic demand was offsetting the boost from resilient exports during the global oil shock triggered by the Iran conflict.

The Export Paradox

Here is the twist most coverage has undersold: China’s exports haven’t collapsed — in some categories they’ve been the standout performer. Higher energy costs stemming from the war in Iran have actually helped pull China out of one of its longest deflationary stretches on record, as global buyers seeking to reduce fossil-fuel exposure have turned to Chinese batteries, electric vehicles and clean-energy technology.

Macquarie analysts found that chips, computer parts and power equipment accounted for roughly half of China’s export growth in the first half of 2026, underscoring how intertwined China’s growth engine has become with global AI infrastructure spending — even as its domestic property and consumption engines continue to sputter.

Will Beijing Blink on Stimulus?

All eyes now turn to the Politburo’s expected late-July meeting. The consensus among analysts is caution rather than a bazooka. Capital Economics expects growth to pick up in the second half as fiscal support ramps up, but warns that entrenched domestic overcapacity means China’s economy will remain structurally reliant on exports rather than consumption for growth. UOB economist Woei Chen Ho told CNN that a large-scale stimulus package appears unlikely, with selective, targeted measures instead more probable to stabilise investment and consumption.

Beijing has already set a budget deficit of roughly 4 percent of GDP for 2026 and lined up heavy bond issuance, with GDP growth forecast to edge up modestly to 4.6 percent in the third quarter before easing again in the fourth, according to Reuters’ economist poll.

Deflation Still the Deeper Problem

Even with the export-led relief, China’s deflationary pressure has not disappeared. Producer prices have now fallen for well over two years running, with July’s year-on-year decline running at roughly 3.6 percent even as consumer inflation hovers near zero. Analysts note this dynamic effectively exports deflation to trading partners already grappling with tariff-driven cost pressures — complicating monetary policy from Washington to Jakarta.

Why It Matters for Southeast Asia and the Gulf

China remains the dominant trading partner for much of Southeast Asia and a major source of imports for Pakistan. A structurally slower, export-dependent China means continued downward pressure on regional manufacturing prices, but also sustained demand for the commodities and components that feed its clean-energy export machine — a dynamic ASEAN economies from Malaysia to Indonesia are positioning to capture, as detailed in our companion coverage of the region’s investment inflows.

The Bank of Canada held its policy rate at 2.25% on July 15, extending a pause that began after its final cut in October 2025, while cutting its 2026 growth forecast to just 0.7% from an April projection of 1.2% — the largest single revision in the current cycle (Hashtag Investing; Bank of Canada).

Two Numbers in Tension

The downgrade sits oddly alongside a more encouraging recent trend: Statistics Canada estimates Q2 growth accelerated to roughly 2.5% annualized after a stalled first quarter, and the Bank explicitly frames the weak annual figure as reflecting front-loaded weakness rather than a deteriorating trajectory — it still projects 1.8% growth in both 2027 and 2028 (Hashtag Investing). Inflation, meanwhile, hit 3.2% in May — the highest since late 2023 — driven by the Middle East conflict’s energy shock and the Hormuz shutdown, before easing modestly as a mid-June ceasefire briefly took hold, only for hostilities to resume days later (BNN Bloomberg).

The Story Underneath: Adaptation, Not Resolution

Bloomberg’s Canada Daily newsletter captures the angle most outlets have missed: Bank of Canada Governor Tiff Macklem’s message across the quarterly forecast round was that Canadian businesses are no longer waiting for clarity on Donald Trump’s tariffs — they are adapting to them structurally (Bloomberg). Trade within North America remains largely tariff-free under the Canada-US-Mexico Agreement, though sector-specific measures continue to bite, and CUSMA itself is now subject to annual reviews rather than the longer-term certainty businesses had previously priced in (Bank of Canada Monetary Policy Report).

A Labour Market Stuck, Not Collapsing

Canada’s unemployment rate sat at 6.5% in June, hovering in a 6.5–7% range since late 2024 — soft but stable. RBC Economics notes housing markets in Toronto and Vancouver, which had significantly underperformed the rest of the country, have begun to firm, while export growth has resumed even if on a lower long-run path than before the tariff era began (RBC Economics).

The Mortgage Renewal Wave Nobody Is Pricing Correctly

An estimated 1.5 million Canadian households have already renewed mortgages at higher rates since the pandemic-era lows, with another million expected to do so over the coming year, according to CMHC estimates cited by Hashtag Investing. Holding the policy rate at 2.25% avoids an immediate additional shock for variable-rate borrowers, but does not reverse the payment increases already locked in for those exiting ultra-low pandemic terms — a slow-moving fiscal drag on household spending that receives far less coverage than the headline rate decision itself.

The Risk the Bank Is Actually Watching

The Bank of Canada identifies two dominant risks to its forecast: the durability of the Canada-US trade relationship, and the trajectory of the Middle East conflict. Oxford Economics’ Tony Stillo frames the latter as the more acute near-term threat, warning that a re-escalation could reproduce the exact inflation dynamic the Bank was managing in May, forcing it back into a reactive posture regardless of direction (BNN Bloomberg).