Malaysia flag Malaysia: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Malaysia is the 4th largest economy of South East Asia and has continued to perform strongly in recent years, due to a strong global demand for electronics, increased demand for commodities, such as oil and gas, an improving labour market, a pro-cyclical budget and ample infrastructure spending. However, the government's declining expenditure as well as lower public and private investments already reduced economic growth to 4.4% in 2019. Due to the COVID-19 pandemic, the growth has been sharply reversed to -5.6% in 2020 but rebounded at 3.5% in 2021. The IMF's latest forecast is expecting another strong rebound at 6% in 2022 and a stabilisation at 5.7% in 2023, subject to the post-pandemic global economic recovery.

During the past few years, a political crisis, low oil and commodity export prices and the slowdown in China have deeply affected Malaysia’s economy, putting pressure on the country's finances. Malaysia has the highest debt level in the region, estimated at 70.7% of GDP in 2021 (IMF, October 2021), with spending increasing faster than GDP. Debt levels are expected to remain stable in 2022 and 2023 (69.9% and 70.1% respectively). Given the boost in oil prices and the government’s previous measures to reduce expenditures by cutting subsidies, the fiscal deficit was reduced to 1.8% in 2019. The government had embarked on a fiscal reform program aimed at achieving a balanced budget by 2020, including rationalisation of subsidies. The 2019 budget continued the government's transformation plans to create new opportunities for wealth generation by ensuring the country is prepared for the digital economy. However, due to the economic crisis caused by the Covid-19 pandemic, the deficit has risen again to -4.5% in 2020 and -4.9% in 2021. It is forcasted to be -3.3% in 2022 and -3.4% in 2023. Future budget measures include a more inclusive economy for the population: increased cash support for low-income families, extra funds for affordable housing projects, more entrepreneurship programmes to elevate lower-income groups and an increase in Malaysia’s competitiveness. The government faces various challenges, including the weakening of the Malaysian currency, the drop in oil prices (since oil revenues account for 30% of state revenue) and the fall in commodity export prices. Inflation went negative in 2020 at -1.1% and then reached 2.5% in 2021. It is expected to stabilise at 2% in 2022 and 2023 (IMF, October 2021).

Malaysia is on track to achieving high-income status by 2024. The country has one of the highest standards of living in Southeast Asia and a low unemployment rate estimated at 4.7% in 2021 (IMF, October 2021), but the youth unemployment rate is more than triple (11.7%, World Bank, 2020) and rural youth doesn't count statistically. The 11th Malaysia Plan charts a path toward advanced economy status and greater inclusion, through a range of development issues such as equity, inclusiveness, environmental sustainability, human capital development, and infrastructure. Less than 1% of Malaysian households live in extreme poverty. The IMF expects the unemployment rate to stabilise at 4.5% in 2022 and 4.3% in 2023. In 2022, the country’s most immediate challenge remains related to the economic, social and public health impacts of the COVID-19 pandemic.

Main Indicators 202020212022 (e)2023 (e)2024 (e)
GDP (billions USD) 337.61373.03e434.06467.46503.11
GDP (Constant Prices, Annual % Change) -5.53.1e5.44.44.9
GDP per Capita (USD) 1011e131314
General Government Balance (in % of GDP) -3.5-4.6-4.1-3.1-3.1
General Government Gross Debt (in % of GDP) 67.769.069.670.070.0
Inflation Rate (%) -
Unemployment Rate (% of the Labour Force)
Current Account (billions USD) 14.0714.176.9510.4511.05
Current Account (in % of GDP)

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

Monetary Indicators 20162017201820192020
Malaysian Ringgit (MYR) - Average Annual Exchange Rate For 1 GBP 5.605.535.385.135.39

Source: World Bank, 2015


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Latest Update: January 2023

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