Malaysian Economy: Economic Growth and Dipping Inflation Rates

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Malaysia Economy
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Malaysia Economy - Overview

• Malaysia is the fourth largest economy in
  Southeast Asia and is the 39th largest in the
  world (as of 2021). It is a newly industrialized
  market economy that has grown steadily in recent
  years.
• The country saw its Gross domestic product (GDP)
  growth rising by 4.3 in 2019 after growing 4.8
  in 2018. This was backed by several factors,
  including improvement in its labour market,
  sufficient spending on infrastructure, a
  pro-cyclical budget, and growing global demand
  for oil and gas, and electronics.  

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Malaysia - GDP

• The impact of the pandemic pushed the economy
  into negative territory, recording a 5.6
  contraction in 2020. In 2021, GDP growth
  rebounded to 3.1 and a year later GDP rose to a
  22-year record high of 8.7.
• However, for 2023 the International Monetary Fund
  (IMF) cut its projection to 4.4 from the
  previous prediction of 4.7.
• In 2021, the unemployment rate rose marginally to
  4.6 from 4.5 in 2020, led by the reopening of
  the nations economy. In 2022, it averaged lower
  at 3.8.

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Malaysia - GDP
(Source IMF WEO January 2023 Update)
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Currency and Central Bank

• Malaysias official currency is the Malaysian
  ringgit or RM, which is divided into 100 sen.
• To tame inflation, BNM has increased the
  overnight policy rate (OPR) four times in 2022 to
  2.75 and analyst expect further increases in
  2023.
• The central bank in November 2022 said headline
  inflation is likely to have peaked, with an
  annual inflation rate of 4.0 in November and
  October 2022. As per the IMF, Malaysias
  inflation is projected to reach 2.8 in 2023.

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Industry and Trade

• Malaysias economy has long transitioned from an
  agricultural-centric phase in the
  1960s into an industrial and services-driven one.
  
• Healthcare services, transport, distributive
  trade, and tourism are the main drivers of its
  service sector. It accounts for 51.55 of the
  countrys GDP in 2021 and employed 63 of
  its labour force. 

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Industry and Trade

•  Malaysias industrial sector makes up over 37
  of the GDP and provides 26.8 of the workforce.
• Agriculture employs 10.5 of Malaysias labour for
  ce. The country is still one of the top producers
  of palm oil, tropical wood, and rubber. However,
  its agricultural sector only contributes 7.1 of
  the GDP (as of 2021).
• Malaysia currently ranks 24th in total exports
  globally, with integrated circuits, refined
  petroleum, petroleum gas, semiconductor devices,
  and palm oil as its main export products.

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Stock Exchanges

• Previously known as the Kuala Lumpur Stock
  Exchange, Bursa Malaysia is the sole stock
  exchange of Malaysia.
• In 2006, Bursa Malaysia partnered with FTSE
  Group to improve its previous Kuala Lumpur
  Composite Index (KLCI) and develop its current
  major index, the FTSE Bursa Malaysia KLCI, which
  is made up of the 30 largest listed companies
  based on market capitalisation.  

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