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Malaysia continues to rank among Asia’s top 20 fastest-growing economies, maintaining its status as a newly industrialized market economy. Historically, the nation has exhibited consistent economic growth, with the notable exception of a significant downturn during the Covid-19 pandemic, which temporarily disrupted its upward trajectory.
This growth was underpinned by a resilient labour market, substantial investments in infrastructure, a supportive fiscal policy, and robust global demand for key exports such as oil, gas, and electronics.
The Covid-19 pandemic had a pronounced impact on Malaysia’s economy, leading to a 5.5% contraction in 2020 due to reduced government spending, declining investments, and global supply chain disruptions. However, the country demonstrated a robust recovery in the following years, with GDP growth rebounding to 3.3% in 2021 and surging to 8.9% in 2022—the highest rate in over two decades—driven by a resurgence in domestic consumption and export activities.
In 2023, economic growth moderated to 3.6%, but accelerated to 5.1% in 2024. However, the International Monetary Fund (IMF), in its April 2025 World Economic Outlook, forecasts a GDP growth rate of 4.1% for 2025 and 3.8% for 2026.
Malaysia GDP Annual Growth Rate (in %)
Malaysia’s population of over 33 million is significantly smaller than its neighbouring ASEAN countries such as Indonesia, the Philippines, Vietnam, and Thailand. However, Malaysia consistently outperforms these nations in labour productivity, thanks to knowledge-based industries, its digital economy and the use of cutting-edge technology for manufacturing.
Malaysian people enjoy an affluent lifestyle only rivalled by Singapore and Brunei in the region. The government remains committed to elevating income per capita to achieve its long-term goal of becoming a high-income nation, as outlined in its various development plans.
The unemployment rate, which stood at 4.5% and 4.6% in 2020 and 2021, has improved since then. The IMF highlights the country’s strong labour market conditions, with the unemployment rate low at 3.2% since 2023.
Malaysia Unemployment Rate (in %)
Currency and Central Bank
Malaysia’s official currency is the Malaysian ringgit (RM), divided into 100 sen. Before August 1975, it was referred to as the Malaysian dollar and cents in English, until the current official names were adopted.
The Central Bank of Malaysia, known as Bank Negara Malaysia (BNM), serves as the nation’s central bank. Established on January 26, 1959, initially as the Central Bank of Malaya or Bank Negara Tanah Melayu, it plays a crucial role in Malaysia’s financial stability. BNM is responsible for issuing currency, formulating and implementing monetary policy, and regulating the country’s financial institutions and credit systems.
In terms of inflation, Malaysia recorded a deflation of 1.1% in 2020 during the height of the pandemic. Inflation rose to 2.5% in 2021 and peaked at 3.4% in 2022, before easing to 2.5% and 1.8% in 2023 and 2024, respectively. For 2025 and 2026, inflation is forecasted to slightly pick up again at approximately 2.4% and 2.2%, respectively.
Malaysia Inflation (in %)
Industry and Trade
Malaysia’s economy has evolved significantly from its agricultural roots in the 1960s to a diversified industrial and services-driven model.
The service sector is the largest contributor to Malaysia’s GDP. According to the Department of Statistics Malaysia (DOSM), the service sector accounted for approximately 60% of GDP in 2024. Key drivers of the sector include finance, telecommunications, healthcare, and tourism. The services sector’s growth was supported by resilient household spending and a rebound in tourism activities.
Contributing around 24% to the GDP, the manufacturing sector showed steady performance in 2024, particularly in the electrical and electronics (E&E) industry. The E&E sector benefited from sustained global demand, especially in semiconductors and integrated circuits.
The construction sector is another contributer Malaysia’s economy which experienced significant growth in 2024. The expansion was driven by large-scale infrastructure projects and increased private sector investments.
Agriculture contributes around 7.7% of GDP. Malaysia remains a major global producer of palm oil, various fruits, and rubber. While the sector’s contribution to GDP has diminished over the years, it plays a vital role in the country’s exports and rural development.
The diversified structure of Malaysia’s economy, with significant contributions from both services and manufacturing sectors, has provided resilience against external shocks and positions the country for sustained growth in the coming years.
As of 2024, Malaysia’s top five trading partners were Singapore, the United States, China, Japan, and Hong Kong. Its major exports include electronic integrated circuits, refined petroleum, petroleum gas, palm oil, and semiconductor devices, underscoring its pivotal role in the global electronics and commodity trade.
On the import side, China remained Malaysia’s largest source of imports, followed by Singapore, other Asian economies, the United States, and Japan. The most imported goods were electrical and electronic products, petroleum products, machinery and parts, chemical products, and manufactured metals.
Malaysia Economy: Balance of Trade
Stock Exchanges and Capital Markets
Bursa Malaysia, formerly known as the Kuala Lumpur Stock Exchange, is Malaysia’s sole stock exchange, offering a diverse range of products, including equities, derivatives, and exchange-traded funds (ETFs). The exchange operates the FTSE Bursa Malaysia KLCI, comprising the 30 largest listed companies by market capitalization.
As of the end of 2024, Bursa Malaysia experienced significant growth in both trading activity and market capitalization. The average daily trading value (ADTV) surged by 55% year-to-date, reaching RM3.19 bn compared to RM2.06 bn in 2023. This increase was driven by heightened participation from both domestic and foreign investors, reflecting improved market sentiment and liquidity.
In May 2024, Bursa Malaysia’s market capitalization surpassed RM2 tn for the first time, marking a historic milestone for the exchange.
Bond Market
Malaysia’s bond market sustained its position as one of Asia’s most developed in 2024, marked by steady growth and robust investor participation. By the end of the year, total outstanding bonds and sukuk (Islamic bond or sharia-compliant bond) reached RM2.10 tn, up from RM2.01 trn in 2023, with government issuances comprising 58.13% (RM1.22 tn), corporate bonds 25.62% (RM537.6 bn), and quasi-government bonds 16.24% (RM340.81 bn) .
The government issues various securities, including Malaysian Government Securities (MGS), Malaysian Government Investment Issues (MGII), Malaysian Treasury Bills (MTB), and Malaysian Islamic Treasury Bills (MITB). Local companies also utilize the bond market for financing by issuing bonds, medium-term notes, and commercial papers.
The yield curve for MGS experienced a slight upward shift across most tenures during 2024, influenced by global economic and political uncertainties. Despite these challenges, Malaysia’s bond market demonstrated resilience, bolstered by its diversified investor base and strong regulatory framework.
Real Estate Market
According to Mordor Intelligence, Malaysia’s real estate market was valued at $36.76 bn in 2024 and is expected to register a CAGR of 6.64% to reach to reach $50.69 bn by 2029.
In 2024, the country’s property market demonstrated robust performance across all sectors, with expectations for continued steady growth in 2025. According to the National Property Information Centre (Napic), the first nine months of 2024 saw a 6.2% year-on-year increase in total transaction volume, and a 14.4% rise in total transaction.
The commercial sector led this growth, with a 16.6% increase in transaction volume and a 32.7% surge in value. This expansion was driven primarily by major infrastructure projects such as the Tun Razak Exchange (TRX), a 70-acre financial district initiated by the government to position Kuala Lumpur as a leading financial centre in Asia.
The Malaysian government has been proactive in implementing measures to support the real estate sector. Initiatives aimed at providing affordable housing and stimulating economic growth have played a significant role in the market’s recovery and are expected to continue influencing the sector positively in the coming years.
Malaysia Housing Index (in %)
Editorial Note:
This article was written with the assistance of AI. A human editor reviewed and refined the text for accuracy and quality before publication.
Source of charts: tradingeconomics.com
