Malaysia poised to reap outsized gains as Southeast Asian economies diverge

According to a report titled "From Tailwinds to Trade-Offs: Southeast Asia Outlook 2026-2035," the six largest ASEAN economies are expected to grow at about 4.8% per year through 2035, yet their paths are diverging. Malaysia, together with Singapore and Vietnam, is identified as likely to capture disproportionate upside thanks to exposure to manufacturing exports, semiconductor demand and ongoing investment momentum. Net foreign direct investment into the ASEAN-6 rose 25% in 2025, contrasting with a 34% decline in China, highlighting the region's growing role in global supply chains.

The report cautions that gains in electronics and AI infrastructure have not yet translated into widespread productivity improvements. For Malaysia, the challenge lies in converting its high-value manufacturing position into stronger domestic capabilities, better energy systems and robust institutional frameworks. Success will depend on policy choices over the next two to three years to lock in the projected growth.