Malaysia
Singapore
Philippines
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Malaysia’s renewable energy and green technology sectors are positioned for significant growth, as global demand for sustainable solutions offers new opportunities for the country. Allianz SE chief economist Ludovic Subran highlighted that industries such as solar energy, sustainable manufacturing, and green tech innovation are in high demand due to the shift towards cleaner energy sources in global supply chains.
“We are witnessing a surge in new export orders for technology and industrial machinery, which strongly positions Malaysia’s renewable energy market for growth,” Subran said at a media briefing on the Autumn Economic Outlook 2024-2026. He emphasized that Malaysia’s strength in upstream sectors like technology and industrial equipment has bolstered its renewable energy sector, placing it well to capture more value from exports as global green transitions progress.
Service-Based Growth
Subran also noted the potential of service-based sectors like legal, tax, and consulting services in supporting the green transition. “Malaysia’s proficiency in English and its cost advantages make it an attractive destination for outsourcing high-value services tied to the green transition,” he explained, positioning Malaysia to capture further growth in service-based industries.
Slower Domestic Growth
While renewable energy prospects are strong, Malaysia’s domestic economy is expected to slow down in 2025, with GDP growth projected to reduce by 0.5%. Subran cited fiscal tightening and the central bank’s decision to hold interest rates as factors impacting growth. The slowdown in the real estate market, combined with economic uncertainties, has also put pressure on households, who are holding back on spending due to expectations of reduced public benefits and potential tax increases.
Additionally, Subran noted that the half-point fiscal cut in public expenditures is influencing consumer behavior. “We’re observing what’s called a ‘Ricardian effect’, where people are curbing spending due to concerns about future financial obligations,” he explained.
Ringgit’s Performance and Global Political Impact
The ringgit is expected to experience volatility, influenced by external factors like the U.S. presidential election. If Donald Trump returns to office, Subran predicted a 5-10% depreciation of the ringgit, driven by a stronger U.S. dollar. Conversely, a Kamala Harris presidency would likely lead to a milder depreciation of around 2-3%.
“Malaysia’s reliance on external capital for growth makes it vulnerable to currency fluctuations, particularly during periods of global political and economic turbulence,” Subran noted. The impact of U.S. political developments on the ringgit underlines the interconnectedness of Malaysia’s economy with international dynamics.
Focusing on Green Energy and Technology
Despite short-term economic headwinds, Subran stressed that Malaysia’s renewable energy and sustainable technology sectors offer a promising foundation for long-term growth. He recommended that Malaysia foster research and development partnerships, improve incentives for technology investment, and continue to advance its position within the global market’s green tech value chain.
“While the immediate outlook may seem challenging, sectors tied to green energy and sustainable technology can drive Malaysia’s economic resilience,” he said. With effective policy adjustments and a focus on reducing external vulnerabilities, Subran believes that Malaysia’s long-term economic prospects remain bright.
Balancing Challenges with Strategic Growth
In navigating economic challenges, Malaysia’s strategic focus on renewable energy and green tech is expected to play a vital role. By fostering sustainable growth through domestic policy and capitalizing on green opportunities in the global market, Malaysia is well-positioned to strengthen its economy and maintain long-term stability.