*Update in April, October each year*
Malaysia's GDP totaled USD 415.57 billion in 2023, with a growth rate of 3.7%, significantly lower than the 8.7% in 2022. This decline is mainly attributed to global trade slowdowns, geopolitical tensions, and tightening monetary policies. Especially, Malaysia's main industry, electronics and electrical sector, has continued to weaken, contributing to the underperformance of GDP growth compared to expectations. Fortunately, the country has been supported by its oil and gas production, agriculture sector, steady household spending, and the ongoing expansion of the tourism industry, resulting in a full-year economic growth of 3.7% in 2023. According to the latest World Economic Outlook report from the IMF, Malaysia's economic growth forecast for 2024 has been revised upwards to 4.4%, and it is expected to maintain at 4.4% in 2025.
Malaysia's GDP is mainly composed of the services sector (59.2%), manufacturing sector (23.4%), agriculture sector (6.4%), and mining and quarrying sector (6.2%). Within the services sector, wholesale and retail trade, information and communications, and financial services are the main contributors. According to the EIU's estimation, under the NIMP 2030 initiative, which prioritizes digitization, electric vehicles, pharmaceuticals, and aerospace industries, the manufacturing sector's value-added is expected to increase. This will narrow the gap between the manufacturing and services sectors in terms of their contribution to GDP.
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In 2023, Malaysia's GDP per capita was USD 12,570, categorizing it as an upper-middle-income country. It is estimated that Malaysia's GDP per capita could reach USD 13,315 in 2024, with a growth rate of approximately 6%.
Malaysia classifies its population into three groups based on household income: B40 (Bottom 40%): Low-income group, comprising 40% of the total population, with household incomes below RM3,401 per month; M40 (Middle 40%): Middle-income group, comprising 40% of the total population, with household incomes ranging from RM3,401 to RM19,752 per month; T20 (Top 20%): High-income group, comprising 20% of the total population, with household incomes above RM19,752 per month.
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*Update in April, October each year*
The Consumer Price Index (CPI) measures the average change in the cost of goods and services purchased by the final consumer and is used to observe the inflationary situation in a country.
In 2023, Malaysia's CPI was 130.4, with a Consumer Price Index inflation rate of 2.5%, slowing down from 3.4% in 2022. This slowdown was mainly attributed to intensified competition in the tourism industry, resulting in slower service price increases. Additionally, the continuous government subsidies for fuel and electricity prices contributed to the stability of the Consumer Price Index in 2023.
With international crude oil prices continuing to rise, it is estimated that Malaysia's fuel subsidy measures will be extended to avoid an increase in transportation costs impacting the Consumer Price Index. However, the Malaysian government is currently planning to adjust the fuel subsidy programs to be targeted fuel subsidy instead of general subsidy. It is not ruled out that the implementation of such policies in the future may push up the Consumer Price Index.
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The producer price index measures inflation that covers five main sectors in Malaysia, namely Agriculture, Forestry and Fishing, Mining, Manufacturing, Electricity and Gas Supply, and Water Supply.
In February 2024, Malaysia's Producer Price Index inflation rate is 0.3%, marking the first increase since September 2023. This increase was primarily driven by significant growth in the "Agriculture, Forestry and Fishing" and "Water Supply" sectors, along with a rebound in prices in the "Mining" and "Electricity and Gas Supply" sectors.
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In 2023, Malaysia's Foreign Direct Investment (FDI) amounted to RM 188.3 billion (USD41.02 billion), marking a 15% growth compared to 2022. The manufacturing sector accounted for 68% of the total FDI, reaching RM128.4 billion (USD27.97 billion), while the service sector accounted for 31%, reaching RM57.9 billion (USD12.61 billion). Malaysia's largest export product is electronics and electrical products, benefiting from the US-China trade conflict, which prompted foreign companies to expand their investments in Malaysia's electronics industry. In 2023, FDI in Malaysia's manufacturing sector grew by 94% compared to 2022.
The top five investing countries in 2023 were Singapore (RM43.7 billion), the Netherlands (RM35.5 billion), the United States (RM21.5 billion), the Cayman Islands (RM17.5 billion), and China (RM14.5 billion), together accounting for approximately 70.5% of the total FDI. Taiwan ranked 11th with RM2.89 billion (USD 630 million).
Ranking at FDI by state, the top five states were Penang (RM61.65 billion), Johor (RM31 billion), Kuala Lumpur (RM30.56 billion), Kedah (RM24.08 billion), and Selangor (RM17.34 billion), together accounting for approximately 87% of the total FDI.
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In 2023, Malaysia's total trade amounted to RM2.64 trillion (USD575.16 billion), marking a decrease of approximately 7% compared to 2022, which recorded RM2.84 trillion (USD618.74 billion). This decline was mainly attributed to factors such as global demand slowdown, geopolitical tensions, and high inflation. Malaysia maintained a trade surplus in 2023, amounting to RM241.06 billion (USD52.52 billion), marking the 26th consecutive year of trade surplus.
The main trading partners for Malaysia in 2023 were ASEAN, China, the United States, the European Union, and Japan, accounting for 67.7% of the total trade volume. The top three export destinations were Singapore (15.4%), China (13.5%), and the United States (11.3%), with major exports including Electrical & Electronic Products, Petroleum Products, and Chemicals & Chemical Products. The top three import origins were China (21.3%), Singapore (11.9%), and the United States (7.3%), with major imports including Electrical & Electronic Products, Petroleum Products, and Chemicals & Chemical Products.
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