Malaysia flag Malaysia: Economic outline

Economic Outline

Economic Indicators

After growing 8.7% in 2022, the Malaysian economy has weathered external challenges and expanded an estimated 4% in 2023. The primary driver for growth was robust private consumption, buoyed by a strong labour market. However, exports to key trading allies have significantly weakened, influenced by diminished external demand and the economic deceleration in China. The International Monetary Fund (IMF) anticipates a modest uptick in growth to 4.3% in 2024, with a stable outlook for 2025. This projection is underpinned by the resilience of private consumption and investment, along with a rebound in public spending.

In 2023, the fiscal deficit contracted, although it remained elevated compared to pre-pandemic years (4.9%, IMF). The reduction in COVID-related spending and a decrease in subsidies, primarily attributed to lower oil prices, played a significant role in lowering public expenditure in the 2023 budget, despite a substantial rise in development expenditure aimed at tackling persistent long-term economic challenges. The 2024 budget is poised to adhere to fiscal consolidation principles, emphasizing the anticipated shift towards targeted fuel subsidies to constrain public expenditure. While persistent public deficits (around 4.5%) may contribute to an increase in public debt, the situation remains manageable, given that a significant portion of the debt is held in local currency by residents. Overall, the debt-to-GDP ratio increased to 66.9% in 2024 (from 65.6% one year earlier) and is expected to remain stable over the forecast horizon. Both headline - estimated at 2.9% in 2023 - and core inflation showed signs of moderation, with the latter decreasing more gradually. Projections suggest a further moderation to 2.7% in 2024; however, uncertainties persist, notably due to subsidy reform considerations.

Malaysia is on track to achieve high-income status by 2026. The country has one of the highest standards of living in Southeast Asia and a low unemployment rate estimated at 3.6% in 2023 (IMF), but the youth unemployment rate is more than triple (11.7%, World Bank) and rural youth is not counted statistically. Despite substantial reductions in poverty and a narrowing of income gaps among ethnic groups over the past five decades, notable regional disparities persist in both income and human capital outcomes in Malaysia. The country's low tax revenues, standing at 12% of GDP, fall significantly below the upper-middle-income country average of 18%. This limited fiscal capacity constrains opportunities for pro-poor initiatives and investments that could spur inclusive growth. Overall, the IMF estimated the country’s GDP per capita (PPP) at USD 37,083 in 2023.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 407.03430.90465.54502.27537.16
GDP (Constant Prices, Annual % Change) 8.74.04.34.44.4
GDP per Capita (USD) 12,46613,03413,91314,83715,691
General Government Balance (in % of GDP) -6.2-4.9-4.5-4.5-4.5
General Government Gross Debt (in % of GDP) 65.666.966.967.067.5
Inflation Rate (%) n/a2.92.72.32.1
Unemployment Rate (% of the Labour Force) 3.83.63.53.53.5
Current Account (billions USD) 12.5211.6413.1514.5615.41
Current Account (in % of GDP) 3.12.72.82.92.9

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: May 2024

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