Malaysia’s economy is expected to expand at a faster pace in 2024. After experiencing weaker-than expected growth last year, Malaysia’s economy grew strongly in the first half of 2024, driven by robust private consumption, increased investment amid higher FDI inflows, and improved export performance. In 2024, the economy is forecast to expand by 4.9 percent, an increase of 0.6 percentage points from the previous forecast in April 2024. Inflation is projected to moderate due to softer global commodity prices and weaker than-anticipated passthrough effects of recent policy changes. Meanwhile, fiscal space is narrowing, and rigid spending is expected to rise due to the recently announced salary adjustments. While optimizing public spending amid ongoing subsidy rationalization efforts can free up budgetary resources, enhancing revenue mobilization is vital to restore fiscal space and sustainably finance Malaysia’s growing spending needs. To maintain its economic momentum and achieve high-income status, Malaysia must transform key sectors, including agriculture, into sustainable engines of growth. The agrofood sector plays a significant role in supporting Malaysia’s economy, contributing 11.6 percent to the national GDP and employing 1.87 million people in 2023 (approximately 10 percent of the total Malaysian workforce). The Government’s vision strategy outlines three key objectives for the agrofood system: (i) become globally competitive and innovative; (ii) enhance the wellbeing of food producers while providing affordable, nutritious food; and (iii) reduce the sector’s environmental footprint. Addressing the imbalance between food demand and supply, exacerbated by urbanization, is crucial. This requires reducing transaction costs and information asymmetries that affect both farmers’ and consumers’ decisions. High transaction costs hinder farmers’ market access and contribute to information gaps. Digital Agricultural Technologies (DATs) offer transformative solutions to these challenges by boosting productivity, creating better jobs (especially for youth), and improving access to finance. Effective DAT implementation requires a focus on three strategic pillars: investing in public goods (e.g., digital literacy and rural connectivity), fostering innovative ecosystems (e.g., data platforms and startup incubators), and cultivating an enabling environment to incentivize private sector development in digital agriculture.
Authors
- Citation
- “ World Bank . 2024 . Farming the Future: Harvesting Malaysia’s Agricultural Resilience through Digital Technologies . Malaysia Economic Monitor ; October 2024 . © Washington, DC: World Bank . http://hdl.handle.net/10986/42245 License: CC BY-NC 3.0 IGO . ”
- Collection(s)
- Economic Updates and Modeling
- DOI
- https://doi.org/10.1596/42245
- Identifier externaldocumentum
- 34404093
- Identifier internaldocumentum
- 34404093
- Pages
- 100
- Published in
- United States of America
- Region country
- Malaysia
- RelationisPartofseries
- Malaysia Economic Monitor ; October 2024
- Report
- 193954
- Rights
- CC BY-NC 3.0 IGO
- Rights Holder
- World Bank
- Rights URI
- https://creativecommons.org/licenses/by-nc/3.0/igo
- UNIT
- EFI-EAP-MTI-MacroFiscal-2 (EEAM2)
- URI
- https://hdl.handle.net/10986/42245
- date disclosure
- 2024-10-15
- region administrative
- East Asia and Pacific
Files
Table of Contents
- Cover 1
- Acknowledgements 5
- Abbreviations 6
- Table of Contents 9
- Executive Summary 10
- Domestic developments 11
- Economic outlook 16
- Farming the Future 18
- PART ONE: Recent Economic Developments and Outlook 23
- Recent Economic Developments 24
- The global economy is stabilizing, following several years of negative shocks 24
- Developments in the Malaysian Economy 26
- Malaysia experienced strong growth amid increased household consumption, investment and trade activi 26
- Exports experienced a positive turnaround amidst strengthening external demand 27
- The services sector and the manufacturing sector dominate foreign and domestic investments 29
- BOX 1. Malaysia’s FDI dynamics: Challenges and opportunities 30
- BOX 2. Special Economic Zones - Key policy lessons from global experience 33
- The labor market continues to improve, with notable increases in formal sector wages 34
- BOX 3. A deep dive into skill-related underemployment 38
- Absolute poverty remains a concern 41
- Inflation edged higher in recent quarters but remains moderate 41
- The Malaysian banking sector has maintained adequate capital and funding positions 43
- Bank credit has expanded at a steady pace in 2024 45
- Corporate financing through capital markets has remained robust 46
- Equity and bond market capitalization reached an all-time high 47
- Bond markets continued to attract foreign capital amid outflows in equity markets 50
- The federal government undertook efforts to rationalize subsidies in the first half of 2024 52
- BOX 4. Reforming the public sector remuneration system 54
- Higher federal government debt highlights the need for continued fiscal consolidation in Malaysia 57
- BOX 5. Future-proofing Malaysia’s public finances 58
- Economic Outlook 61
- Despite improved near-term prospects, the global outlook remains subdued by historical standards 61
- Malaysia’s economy is expected to expand at a faster pace in 2024 62
- Malaysia’s growth outlook is subject to downside risks 63
- PART TWO: Farming the Future 65
- Harvesting Malaysia’s Agricultural Resilience through Digital Technologies 66
- Transforming potential: The pivotal role of agriculture in Malaysia’s economic growth 67
- Navigating key challenges in Malaysia’s agriculture 68
- Summary of challenges and their implications 71
- Premise of digitalization for agriculture and food systems 72
- Transformative impacts of digital technologies on the agrofood system 76
- Pathways of implementing DAT: Scaling up pilots and learning from global experiences 83
- BOX 6. Pilot project of digital solutions for super-intensive white shrimp farming 84
- BOX 7. Pilot program financial results 85
- Learning from global examples 86
- BOX 8. Bundling in digital agriculture - an example from India 86
- BOX 9. DAT innovations to optimize private sector investments - experiences from other countries 87
- BOX 10. Government-supported efforts to expand DAT and create an agritech sector 89
- Recommendations for scaling up DAT adoption in Malaysia 90
- Annex: Roadmap for enabling conditions for digital transformation (policy action plan)58 95
- References 98
