skyline at night in Malaysia

Malaysia Economic Forecast

Malaysia Economic Outlook

After disappointing market expectations in Q2 and slowing from Q1, annual GDP is likely rising at a similar pace in Q3. Industrial output rebounded year on year in July from Q2’s slump on recovering mining activity. Meanwhile, a lower unemployment rate and softer inflation in July compared to Q2 likely cushioned household spending. Less positively, merchandise exports fell at a steeper annual pace in July. In the same month, retail sales rose less compared to Q2, and the merchandise import downturn deepened, foreshadowing cooling domestic demand. In other news, in September, Malaysia unveiled plans to ban exports of rare earths (RE)—used in semiconductors, electric vehicles and military equipment. The decision, which will likely have a limited impact on the domestic RE industry and GDP, could discourage foreign investment in Malaysia ahead and trigger export curbs from other countries.

Malaysia Inflation

Inflation fell to 2.0% in July (June: 2.4%) on weaker price pressures for food and falling transport prices. In H2, the headline rate will average below H1’s figure and within the Central Bank’s 2.0–3.0% target range on elevated interest rates, softer activity growth and state subsidies. That said, the onset of El Niño poses an upside risk to food prices later this year.

This chart displays Economic Growth (GDP, annual variation in %) for Malaysia from 2013 to 2022.

Malaysia Economic Data

2018 2019 2020 2021 2022
Population (million) 32.4 32.5 32.6 32.6 33.0
GDP (USD bn) 359 365 338 374 407
GDP per capita (USD) 11,079 11,227 10,361 11,470 12,338
GDP (MYR bn) 1,448 1,513 1,418 1,549 1,791
Economic Growth (Nominal GDP, ann. var. %) 5.5 4.5 -6.2 9.2 15.7
Economic Growth (GDP, ann. var. %) 4.8 4.4 -5.5 3.3 8.7
Domestic Demand (ann. var. %) 4.7 3.9 -4.8 3.8 9.3
Private Consumption (ann. var. %) 8.0 7.7 -3.9 1.9 11.2
Government Consumption (ann. var. %) 3.4 1.5 4.1 6.4 4.5
Fixed Investment (ann. var. %) 1.4 -2.1 -14.4 -0.8 6.8
Exports (G&S, ann. var. %) 1.9 -1.0 -8.6 18.5 14.5
Imports (G&S, ann. var. %) 1.5 -2.4 -7.9 21.2 15.9
Industrial Production (ann. var. %) 3.2 2.4 -4.1 7.4 6.7
Retail Sales (ann. var. %) 12.4 7.0 -2.0 3.5 22.7
Unemployment (% of active population, aop) 3.3 3.3 4.5 4.6 3.8
Fiscal Balance (% of GDP) -3.7 -3.4 -6.2 -6.4 -5.6
Public Debt (% of GDP) 51.2 52.4 62.0 63.3 60.3
Money (ann. var. of M2 %) 8.9 3.5 4.5 6.3 4.3
Inflation (CPI, ann. var. %, eop) 0.2 1.0 -1.4 3.2 3.8
Inflation (CPI, ann. var. %, aop) 1.0 0.7 -1.1 2.5 3.4
Inflation (PPI, ann. var. %, aop) -1.1 -1.4 -2.7 9.5 7.7
Overnight Policy Rate (%, eop) 3.25 3.00 1.75 1.75 2.75
3-Month KLIBOR (%, eop) 3.69 3.35 1.94 2.05 3.68
10-Year Bond Yield (%, eop) 4.08 3.35 2.69 3.58 4.10
Stock Market (ann. var. of FTSE BM KLCI %) -5.9 -6.0 2.4 -3.7 -4.6
Exchange Rate (MYR per USD, eop) 4.13 4.09 4.02 4.17 4.41
Exchange Rate (MYR per USD, aop) 4.04 4.14 4.20 4.14 4.40
Current Account Balance (USD bn) 8.0 12.8 14.1 14.5 12.5
Current Account Balance (% of GDP) 2.2 3.5 4.2 3.9 3.1
Merchandise Trade Balance (USD bn) 30.7 35.2 43.6 61.2 58.2
Merchandise Exports (USD bn) 249 240 234 299 352
Merchandise Imports (USD bn) 218 205 191 238 294
Merchandise Exports (ann. var. %) 14.4 -3.4 -2.5 27.9 17.6
Merchandise Imports (ann. var. %) 12.1 -6.0 -7.1 25.0 23.4
Foreign Direct Investment (USD bn) 7.6 7.8 3.2 12.2 16.9
International Reserves (USD bn) 101 104 108 117 115
International Reserves (months of imports) 5.6 6.1 6.8 5.9 4.7
External Debt (USD bn) 229 229 228 261 260
External Debt (% of GDP) 63.8 62.6 67.6 69.7 63.9

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