Country’s Macro Environment

Although Malaysia’s economy has been rapidly developing over the last 50 years, it is

widely considered to be a developing country, as opposed to a developed one. The reason for that

characterization is that while Malaysia has been relying less on its natural resources, it still trails

most developed countries in metrics such as: Gross Domestic Product (GDP), GDP per capita,

and overall standard of living. Thus, both the World Bank and the IMF classify Malaysia as a

developing, albeit emerging, country (Investopedia, 2019).  An emerging market economy is

defined as the economy of a developing nation that holds some, but not all, characteristics of a

developed nation. Emerging economies are typically more involved in global transactions,

becoming more integrated with the global economy. Some characteristics of an emerging

economy include increased trade as well as an increase in foreign direct investment. Malaysia

joins India, Pakistan, Saudi Arabia, Brazil, Mexico, Russia, and China as some noteworthy

emerging market economies (Chappelow, 2020). 

Malaysia is the 4th largest economy of South-East Asia and that is due to a multitude of

assets such: strong global demand for electronics, increased global demand for oil and gas, an

improved & improving labour market, and sufficient spending on infrastructure ("Country risk of

Malaysia : Economy", 2020). These assets are displayed upon analyzing the country’s Gross

Domestic Product (GDP), GDP per capita, as well as Purchasing Power Parity. The GDP relates

to the total market value that all goods and services, produced in Malaysia, generate; whereas the

GDP per capita is an indicator of the total income generated by economic activity (Chappelow,

2020). Malaysia estimated 364.70 billion US dollars in 2019 and ranked as the world's 35th

largest GDP (World Bank, 2019). Once GDP per capita is adjusted for Purchasing Power Parity

(PPP), which is the modification in GDP per capita for comparisons of the living standards
between different countries, Malaysia jumps to its highest record with an estimated 28,350.60

dollars (World Bank, 2019). Since the Asian financial crisis in 1998, Malaysia’s economy has

been mostly projecting upwards. In fact, according to the World Bank, Malaysia has been, on

average, consistently growing at a rate of 5.4% since 2010. At that rate, many expect the country

to successfully transition from an upper middle-income economy to a high-income one by 2024

(World Bank, 2020).