KUALA LUMPUR, May 14 — The World Bank projects Malaysia’s economy to record solid growth of 4.4 per cent this year, with domestic demand continuing to anchor activity.
World Bank Philippines, Malaysia and Brunei division director Zafer Mustafaoglu however said the near-term outlook is subject to considerable uncertainty as risks favour 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 welcome 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 per cent, driven by strong domestic demand and export performance. This remarkable outcome reflects the economy’s underlying strength and resilience,” he added.
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 Malaysia’s jobs challenge is fundamentally a productivity one, and if productivity growth does not increase, wages cannot sustainably rise.
“Addressing this challenge requires shifting from job quantity to job quality. The report highlights three priorities, namely, unlocking a more dynamic business environment, ignite innovation and channel finance to productivity, and equip workers with the right skills and build future-ready human capital,” Mustafaoglu said.
