S&P Global chief economist says Malaysia on track for high-income nation by 2025
23 Jun 2023
Malaysia is on track to becoming a high-income economy by 2025 and emerge as a trillion-dollar economy by 2036.
This will partially be attributed to the country’s emerging role as a technology leader, S&P Global Market Intelligence chief economist for Asia Pacific Rajiv Biswas said.
A high-income economy according to the World Bank in 2022 is a country with a gross national income per capita of more than US$13,200. Malaysia had a GNI per capita of US$12,000 in 2022.
Biswas told the News Straits Times that Malaysia is among the countries where the industry structure has shifted towards electronics and integrated circuits manufacturing. This industry shift will become an important economic driver for Malaysia.
He said Malaysia has joined the ranks of other technology leaders in the Asia Pacific region namely South Korea, Japan, China, Singapore and Vietnam.
Biswas added that this is especially important because Asia is the biggest driver of global growth, and in the next 10 years half of the total increase in global gross domestic product (GDP) will derive from the Asia Pacific region.
“Malaysia’s exports of electrical and electronics products accounted for 38 per cent of total merchandise exports.
“Over the next 20 years, Malaysia will further develop as a hub for exporting manufacturers of electronics, software services and communications industry such as information technology business process outsourcing,” he said.
Biswas explained that Malaysia is also one of the beneficiaries of a shift in supply chains where many companies are seeking to reduce its dependency on Northeast Asia due to high labour costs besides geopolitical reasons and natural disasters.
“Malaysia has stable infrastructure, reliable communications, good transport and low risk of natural disasters,” he said.
In terms of achieving trillion-dollar economy status, Biswas said this would be a meaningful milestone for Malaysia because S&P forecasts show that at a GDP of US$1 trillion by 2036, GDP per capita will be US$26,300.
“What’s really important is GDP per capita, because if a country becomes a trillion dollar economy but the population is huge then it does not really help that much,” he said.
Not many developing countries have entered the trillion-dollar economy club, other than Organisation for Economic Co-operation and Development (OECD) countries. In Asean, only Indonesia is on the list.
“By 2030, Malaysia’s income per capita will be slightly higher than Turkiye’s per capita income, as it will reach US$18,000 by 2030 and Turkiye is an OECD country as well as Mexico with US$15,300 by 2030, which is also an OECD and North American country.
“Other than that, Malaysia’s per capita income will also be higher than Russia where it will reach US$15,000 by 2030 and Brazil, which will be US$14,000 by 2030,” Biswas said.