World Bank Sees Malaysia’s Economy Expanding 4.4 Per Cent Amid Global Risks
KUALA LUMPUR: World Bank expects Malaysia’s economy to grow by 4.4 per cent in 2026, with domestic demand continuing to serve as the key pillar supporting the country’s economic activity.
However, the international financial institution cautioned that Malaysia’s economic outlook remains vulnerable to global uncertainties, including geopolitical conflicts, trade tensions and slower worldwide economic growth.
World Bank division director for the Philippines, Malaysia and Brunei, Zafer Mustafaoglu, said current risks are largely tilted to the downside if global conditions continue to deteriorate.
According to him, international conflicts, policy uncertainty among major economies, financial market volatility and weaker global expansion could negatively impact trade and investor confidence.
“As a highly open economy, Malaysia remains exposed to global developments, particularly through trade and financial channels,” he said during the launch of the April 2026 Malaysia Economic Monitor report in Kuala Lumpur today.
He noted that Malaysia nevertheless demonstrated strong resilience during the second half of last year, recording better-than-expected growth despite ongoing geopolitical and economic uncertainties worldwide.
The performance enabled Malaysia to achieve an overall economic growth rate of 5.2 per cent in 2025, supported by stronger domestic demand and export activity.
According to Mustafaoglu, the achievement reflects the strength of the country’s economic fundamentals and its ability to withstand external challenges.
At the same time, he stressed that Malaysia must address labour productivity challenges even though the national employment market remains relatively healthy.
He explained that moderate productivity growth has resulted in many graduates working in positions that do not fully utilise their qualifications and skills.
“This situation is not only related to employment issues but also reflects challenges involving business dynamism and the effective use of human capital,” he said.
He added that productivity and business innovation could be constrained by uncompetitive regulations, cumbersome approval processes, uneven access to financing and weaknesses in market competition.
Slow insolvency procedures, he said, could also affect business growth and limit the expansion potential of companies.
According to him, sustainable wage growth can only be achieved if labour productivity continues to improve.
“Malaysia’s key challenge is not merely creating jobs, but ensuring the jobs created offer higher quality and value,” he said.
The report also recommended several measures, including strengthening the business environment, accelerating innovation and improving workforce skills to better prepare the country for the future economy.
Economic observers believe Malaysia still possesses solid growth fundamentals, although structural economic reforms must continue in order for the country to remain competitive globally.
-wilayah.com.my
