Semiconductor Upcycle To Drive Penang's Growth Amid Global Headwinds - Economist
By Farhana Poniman
GEORGE TOWN, April 19 (Bernama) -- Despite rising geopolitical uncertainties, a sustained global semiconductor upcycle is expected to drive Penang’s economic growth through 2026.
OCBC senior ASEAN economist Lavanya Venkateswaran said the state’s electrical and electronics (E&E) sector remains resilient, though risks stemming from the West Asia conflict warrant close monitoring as it could weigh on transportation and logistics, potentially impacting 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 told Bernama.
On the export front, she said Malaysia’s E&E market, primarily directed toward ASEAN, the United States, and China, is expected to continue driving growth, albeit with exports to the US impacted by tariff policies.
While manufacturing remains the state’s economic bedrock, Lavanya highlighted that the services sector, including wholesale and retail trade, finance, and insurance, continues to be a significant contributor to the national GDP, while the tourism sector could also pose as a burgeoning catalyst, supported by the ‘Visit Malaysia 2026’ programme.
“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.
“These should help provide some counter-cyclical resilience to the state’s economic growth in the coming years,” she said.
Addressing the global energy crisis, Lavanya described Malaysia as one of the more resilient economies in ASEAN regarding price and volume shocks; nonetheless, she noted that ripple effects are expected in sectors such as fertiliser, plastics, and logistics.
On whether Penang-based exporters are facing a margin squeeze, she said it may be premature to fully assess the impact of higher oil prices.
However, Lavanya added that Penang’s economy would be susceptible to oil price shocks, given the importance of the manufacturing sector to GDP growth, and that downside risks would intensify if geopolitical risks remain elevated.
-- BERNAMA