World Bank Projects Malaysia’s Economy to Grow 4.4% in 2026 Despite Global Risks

KUALA LUMPUR — The World Bank has projected Malaysia’s economy to grow by 4.4% in 2026, supported mainly by steady domestic demand despite rising global risks. The projection was highlighted during the launch of the April 2026 Malaysia Economic Monitor in Kuala Lumpur.

World Bank Division Director for the Philippines, Malaysia and Brunei, Zafer Mustafaoglu, said Malaysia’s near-term economic outlook remains exposed to uncertainty, with risks leaning to the downside. He noted that geopolitical conflicts, trade tensions, weaker global growth, financial market volatility and policy uncertainty in major economies could affect trade activity and investor confidence.

Malaysia’s economy recorded stronger-than-expected performance in the second half of 2025, helping lift full-year growth to 5.2%. According to Mustafaoglu, the result reflected the country’s economic resilience, supported by strong domestic demand and export performance.

However, the World Bank warned that Malaysia’s open economy remains vulnerable to external pressures, particularly through trade and financial channels. As a country closely connected to global supply chains, any slowdown in major economies or disruption in international markets could weigh on Malaysia’s growth momentum.

Beyond external risks, the World Bank also highlighted Malaysia’s productivity challenge. While employment remains strong, productivity growth is still modest, leading to concerns over underemployment, especially among graduates working in roles that do not fully use their skills.

Mustafaoglu said Malaysia’s labour market challenge is not only about job availability, but also job quality. He stressed that without stronger productivity growth, wage increases would be difficult to sustain over the long term.

The World Bank report outlined three key priorities for Malaysia: creating a more dynamic business environment, encouraging innovation and financing productivity, and equipping workers with future-ready skills. These steps are seen as important to strengthen long-term growth and help Malaysia move toward higher-quality employment.

Overall, the 4.4% growth projection suggests that Malaysia’s economy remains on a stable path, but policymakers and businesses will need to manage global uncertainty carefully while improving productivity at home.