The World Bank projects Malaysia’s economy to record solid growth of 4.4% in 2026, with domestic demand continuing to anchor activity amid global risks.
KUALA LUMPUR: The World Bank projects Malaysia’s economy to record solid growth of 4.4% this year, with domestic demand continuing to anchor activity.
World Bank division director for the Philippines, Malaysia and Brunei Zafer Mustafaoglu said, however, the near-term outlook is subject to considerable uncertainty as risks are tilted to the downside.
“Geopolitical conflict and trade tensions, weaker global growth, financial market volatility, and policy uncertainty in major economies could all weigh on trade and confidence,” he said in his welcoming address at the launch of the April 2026 Malaysia Economic Monitor here, today.
He said that as a highly open economy, Malaysia remains exposed especially through trade and financial channels.
Malaysia’s growth outperformed expectations in the second half of 2025 even in a profoundly uncertain global environment, he noted.
“That lifted full-year growth to a robust 5.2%, driven by strong domestic demand and export performance. This remarkable outcome reflects the economy’s underlying strength and resilience,” he added.
At the same time, Mustafaoglu highlighted that Malaysia is facing an important challenge: while employment remains strong, productivity growth is modest.
“The result is underemployment, with many graduates in roles that do not fully utilise their skills. This is not only a labour market issue but the underutilisation of human capital is a business dynamism issue.
“When the business environment is hampered by insufficient market contestability, uncompetitive regulations and cumbersome approval processes, uneven access to finance, and slow insolvency processes, business innovation is limited, weakening productivity and wage growth,” he added.
He also said that Malaysia’s jobs challenge is fundamentally a productivity challenge and if productivity growth does not increase, wages cannot rise sustainably.
“Addressing this challenge requires shifting from job quantity to job quality. The report highlights three priorities, namely unlocking a more dynamic business environment, to ignite innovation and channel finance to productivity, and to equip workers with the right skills and build future-ready human capital,” he said.
