PUTRAJAYA: Malaysia is now just 7.1% below the World Bank’s high-income threshold after the economy expanded 5.8% in the second quarter of 2026, strengthening confidence that the country can achieve developed nation status during the 13th Malaysia Plan (13MP) period.
Economy Minister Datuk Akmal Nasrullah Mohd Nasir said the stronger-than-expected growth, coupled with low inflation and a resilient labour market, showed the economy remained on a firm footing despite global uncertainties.
“The economy grew by 5.8%, inflation remained contained at 1.9% and unemployment stood at 3%. Malaysia is now just 7.1% below the high-income threshold.”
“These are encouraging numbers, but crossing that threshold is not an end in itself. What matters is whether growth delivers better wages, more quality jobs and stronger purchasing power for Malaysians,” he said at the launch of the OECD Economic Surveys: Malaysia 2026 report today.
Malaysia’s gross national income (GNI) per capita rose to RM57,200, equivalent to about US$13,351 under the World Bank Atlas method in 2025, compared with the World Bank’s high-income threshold of US$14,375.
“The threshold is within our reach during this RMK13 (13MP) period. But high-income status cannot be treated as a statistical finish line. It must be reflected in better wages, stronger public services and greater economic security for the rakyat,” Akmal Nasrullah stressed.
The government is maintaining its 2026 gross domestic product (GDP) growth forecast of between 4% and 5%, underpinned by resilient domestic demand, private investment, export activity and continued investments in high-technology industries such as semiconductors and data centres.
Akmal Nasrullah said while economic growth remained encouraging, the greater challenge was ensuring it translated into higher productivity and quality employment.
“Headline growth tells only part of the story. Economic progress must lead to more productive firms, better jobs, rising incomes and broader opportunities across regions and communities.”
The OECD report highlighted a persistent mismatch between education outcomes and labour market needs, noting that 35.6% of tertiary-educated Malaysians remain in jobs below their skill level.
Akmal Nasrullah acknowledged the challenge, saying Malaysia could no longer measure success by the number of graduates alone.
“When 35.6% of tertiary-educated workers remain in jobs below their skill level, we cannot measure success by graduate numbers alone. Education and training must lead to high-value jobs, stronger productivity and wages that reflect workers’ skills.”
Education reforms under the 13MP will focus on improving learning quality while strengthening links between education and industry, the minister said.
Among the initiatives are making preschool compulsory for five-year-olds, extending compulsory schooling from primary education through Form Five, expanding Technical and Vocational Education and Training (TVET), introducing a unified TVET rating system, strengthening Academy in Industry (AiI) programmes and accelerating upskilling in semiconductors, artificial intelligence and the digital economy.
“TVET must no longer be seen as a second choice. It should be a first-choice pathway to a skilled career, professional recognition and upward mobility,” Akmal Nasrullah said.
He reaffirmed the government’s commitment to fiscal consolidation, noting that the federal fiscal deficit had narrowed from 5.5% of GDP in 2022 to 3.7% in 2025.
Malaysia aims to reduce the deficit further to 3% or below by 2030, while ensuring targeted assistance continues to reach vulnerable groups.
“Fiscal consolidation is not about withdrawing support from those who need it. It means directing assistance more accurately, reducing leakages and safeguarding the government’s capacity to invest in education, healthcare and infrastructure,” Akmal Nasrullah said.
The government, he added, will increasingly leverage integrated databases, including Padu (Central Database Hub), to improve subsidy targeting while ensuring reforms are implemented gradually and communicated clearly.
Akmal Nasrullah said sustaining higher productivity will require Malaysia to move away from labour-intensive growth towards an innovation-driven economy supported by skilled workers, digital adoption and higher-value industries.
Labour productivity per hour worked increased by 4.8% in the first quarter of 2026, but sustained reforms remained necessary to lift productivity across sectors.
As part of those efforts, Akta Iltizam aims to reduce unnecessary regulatory burdens by 25% over three years, while Pemudah will work with ministries and agencies to streamline high-impact business approvals through clearer service standards, more predictable decision-making and stronger accountability.
Akmal Nasrullah said, “Productivity is not about asking people to work longer. It is about enabling them to create more value in every hour.
Malaysia’s long-term competitiveness will depend on disciplined implementation of reforms rather than policy announcements alone, he said. “National development is not a straight line. It is a disciplined process of learning, reforming and delivering. The true test of reform is not the announcement; it is the outcome.”
