Throughout 2023, concerns lingered over Malaysia’s economic stability due to global uncertainties and weak external demand. Reports from the Malaysian Institute of Economic Research (MIER) indicated a general pessimism among the private sector, with indices reflecting negative sentiments in business confidence, consumer sentiment, and employment.
However, recent developments have shifted the outlook positively for 2024/2025. Let’s explore the key factors contributing to this optimism:
Geopolitical Easing
- Geopolitical tensions related to conflicts in Ukraine and the Middle East, as well as US-China relations, have shown signs of easing.
- A more stable global environment is expected, enabling major economies, including Malaysia, to recover from the lingering effects of the Covid-19 pandemic.
Global Economic Improvement
- The global economy has witnessed positive trends, notably in the US, with steady economic growth and low unemployment rates.
- Reduced inflation levels globally allow businesses and consumers to plan and allocate resources more effectively.
Asia-Pacific Growth
- Despite challenges in global demand, the Asia-Pacific region is anticipated to contribute significantly to global economic growth in 2024.
- Malaysia’s strategic location in this dynamic region positions it to benefit from the overall growth and economic activities.
Government Stability
- The coalition government, under the leadership of Prime Minister Anwar Ibrahim, has achieved stability since its formation in November 2022.
- Political stability is crucial for the continuous implementation of essential fiscal and monetary policies, fostering developmental projects, and steering economic growth.
Record Budget for Economic Growth
- The government’s allocation of a record-high budget of RM393.8 billion for 2024 emphasizes its commitment to economic growth.
- The budget prioritizes public spending, revenue enhancement, and effective debt management, laying the groundwork for various development projects.
Catalytic Projects Potential
- High-impact projects, both publicly and privately funded, are in the pipeline, contributing to economic development.
- Projects such as the High-Speed Rail, Mass Rapid Transit Circle Line, and Automotive High-Technology Valley are set to stimulate economic activity.
Increased Approved Investments
- Malaysia experienced a significant 6.6% increase in approved investments totaling RM225.0 billion during the first nine months of 2023.
- Foreign Direct Investments (FDI) accounted for 55.9%, reflecting a growing confidence among foreign corporate entities in Malaysia’s economic prospects.
Tourist Arrivals Surge
- Malaysia achieved a remarkable 26 million tourist arrivals in 2023, the highest in Southeast Asia.
- The implementation of a 30-day visa exemption for travelers from China and India, effective from December 1, 2023, is expected to further boost tourist arrivals in 2024.
Positive Economic Outlook
- RAM Ratings project Malaysia’s economy to grow between 4.5% and 5.5% in 2024, reflecting optimism fueled by improved global conditions, increased FDI, and robust tourism.
Relaxed MM2H Programme
- The revamped Malaysia My Second Home (MM2H) program, with its Platinum, Gold, and Silver categories, is expected to attract a higher number of foreign residents.
- The ability for participants to withdraw a portion of their fixed deposits for property purchases is likely to stimulate demand for properties valued at different levels.
Enhanced Investor Sentiments
- With inflation, cost of living, and interest rates under control, investors are expected to gradually return to the property market.
- New opportunities may arise in areas impacted by catalytic projects, offering potential for growth and development.
In conclusion, Malaysia’s medium to long-term growth outlook remains favorable, supported by a resilient domestic financial system. While anticipating an improvement in the property market, caution is advised, and investors should seek professional guidance. The potential challenges, including global economic shifts or political uncertainties, need to be considered for a comprehensive perspective.
