Malaysia is on course to attain high-income nation status by 2028, driven by stronger-than-expected economic growth and a strengthening currency, according to the World Bank. Apurva Sanghi, the lead economist for Malaysia at the Washington-based lender, highlighted that the Southeast Asian nation’s economic outlook has improved, with the World Bank raising its 2024 growth forecast for the country from 4.3 percent to 4.9 percent.
The robust growth is boosting living standards across Malaysia, with a stronger ringgit further supporting the country’s trajectory toward high-income classification. “Higher-income status is within reach,” Sanghi noted, underscoring the positive economic indicators and the government’s ongoing reforms. Malaysia’s economy is now 12 percent larger than its pre-pandemic size, outpacing most Southeast Asian countries except Singapore.
Sanghi emphasized that continued economic reforms and a bit of luck could enable Malaysia to reach this significant milestone by 2028. He specifically pointed out the need for the government to tackle structural issues such as underemployment, particularly the mismatch faced by nearly 2 million Malaysians who are overqualified for the jobs they hold. Addressing this problem, Sanghi said, would greatly improve the morale and prospects of young Malaysians, whose aspirations are currently hindered by limited opportunities in line with their qualifications.
In addition to structural reforms, Sanghi also urged Malaysia to reduce its reliance on fuel subsidies, which have long been a feature of the country’s economic policies. Phasing out these subsidies would allow for better fiscal management and provide more resources to address key challenges, including improving productivity and creating higher-value jobs.
Malaysia’s economic growth in 2023 stood at 3.7 percent, following an impressive 8.7 percent expansion in 2022. The World Bank categorizes high-income nations as those with a gross national income per capita of $14,005 or higher. With the current growth momentum, Malaysia is on track to meet this benchmark by 2028.
Despite the optimistic outlook, Sanghi emphasized the importance of sustaining reforms to ensure long-term prosperity. “In summary, yes, the economy is currently in a good place,” he said. “But it can be in an even better place if we tackled the underemployment issue that affects the hearts, minds, and morale of millions of young, aspiring Malaysians.”
