Penang’s economy is set to ride a sustained global semiconductor upcycle through 2026, with the state’s GDP continuing to outpace the national average despite rising geopolitical uncertainties, according to OCBC senior ASEAN economist Lavanya Venkateswaran.
Speaking to Bernama, Venkateswaran said the state’s electrical and electronics (E&E) sector remains resilient. However, she noted that risks from the West Asia conflict warrant close monitoring, as it could weigh on transportation and logistics and potentially disrupt the semiconductor supply chain.
“Penang’s GDP growth has consistently outperformed the national average since the pandemic. With the global semiconductor upcycle likely to sustain through 2026, we expect gross domestic product (GDP) growth in Penang to remain supported,” she said.
On exports, she said Malaysia’s E&E market, primarily directed toward ASEAN, the United States, and China, is expected to continue driving growth, though exports to the US are being impacted by tariff policies.
While manufacturing remains the state’s economic bedrock, Venkateswaran highlighted that the services sector, including wholesale and retail trade, finance, and insurance, continues to be a significant contributor to national GDP. The tourism sector could also emerge as a burgeoning catalyst, supported by the ‘Visit Malaysia 2026’ campaign.
“There is a concerted push from the authorities to move the semiconductor sector higher up the value chain while boosting intra-city connectivity and promoting tourism for holiday and medical purposes,” she said.
“These should help provide some counter-cyclical resilience to the state’s economic growth in the coming years.”
On the global energy crisis, Venkateswaran described Malaysia as one of the more resilient economies in ASEAN regarding price and volume shocks, but noted that ripple effects are expected in sectors such as fertiliser, plastics, and logistics.
Regarding whether Penang-based exporters face a margin squeeze, she said it may be premature to fully assess the impact of higher oil prices. However, she added that Penang’s economy would be susceptible to oil price shocks given the importance of manufacturing to GDP growth, and downside risks would intensify if geopolitical tensions remain elevated.
Source: Bernama
