Economy of Malaysia

The economy of Malaysia is an emerging and developing, upper-middle income, highly industrialised, mixed economy. It ranks the 36th largest in the world in terms of nominal GDP, however, when measured by purchasing power parity, its GDP climbs to the 30th largest. Malaysia is forecasted to have a nominal GDP of nearly half a trillion US$ by the end of 2024. The labour productivity of Malaysian workers is the 62nd highest in the world and significantly higher than China, Indonesia, Vietnam, and the Philippines.

Malaysia excels above similar income group peers in terms of business competitiveness and innovation. Global Competitiveness Report 2024 ranks Malaysian economy as the 34th most competitive country economy in the world while Global Innovation Index 2024 ranks Malaysia as the 33rd most innovative nation globally.

Malaysia is the 35th most trade intensive economy globally; higher than Denmark, Norway, Germany, and Sweden with total trade activities at 132% of its GDP. In addition, the Malaysian economy has developed vertical and horizontal integration across several export linked industry while capturing a significant global market share for manufactured products and commodities ranging from integrated circuit, semiconductor, and palm oil to liquefied natural gas. Furthermore, Malaysia is an important nexus in the global semiconductor market and is the third largest exporter of semiconductor devices in the world. Malaysia has unveiled plan to target over US$100 billion in investment for its semiconductor industry as it positions itself as a global manufacturing hub.

By mid-2024, the country attracted large foreign direct investment centered on the global artificial intelligence boom with foreign technology companies like Google, Microsoft and ByteDance flocked to the country and invested US$2 billion, US$2.2 billion, and US$2.1 billion, respectively, to capitalise on Malaysia's competitive advantage in the data center and hyperscale construction due to its highly educated workforce, cheap land acquisition, low water and electricity cost, and the absence of natural disasters. This is expected to consolidate Malaysia position as a cloud computing hub for wider Asia, increasing its high value sector and propel its economy to meet the government high-income economy goal.

Overall, the Malaysian economy is highly robust and diversified with the export value of high-tech products in 2022 standing around US$66 billion, the third highest in ASEAN. Malaysia exports the second largest volume and value of palm oil products globally, after Indonesia.

Malaysians enjoy a relatively affluent lifestyle compared to many of its neighbours in Southeast Asia. This is due to a fast-growing export-oriented economy, a relatively low national income tax, highly affordable local food and transport fuel, as well as a fully subsidized single-payer public healthcare system. Malaysia has a newly industrialised market economy, which is relatively open and state-oriented.