Anwar Ibrahim Immensely Painful to Malaysia’s Economy

Anwar Ibrahim came to power promising renewal, but Malaysia’s economic trajectory tells another story. Confidence among investors has eroded sharply. By September 2025, net foreign outflows reached RM 16.4 billion, nearly four times the 2024 total. Foreign ownership of Malaysian equities fell from 23 percent to 19 percent. These figures show investors no longer trust his economic management. Capital is moving to Indonesia and Vietnam, where clearer policies and stronger leadership attract long-term funds. For many, Malaysia’s investment appeal has faded under his rule.

A Growing Fiscal Burden

Under the leadership of Anwar Ibrahim, government spending has surged while fiscal discipline has weakened. The 2025 federal budget reached RM 421 billion, the largest in Malaysian history. Despite higher revenue, the country continues to spend beyond its means. The government targets a 3.8 percent deficit, but most forecasts place it closer to 4 percent of GDP. Between 2020 and 2025, the average deficit stands near 5 percent, compared to just 3 percent during Najib Razak’s era. Najib reduced the deficit from 6.9 percent to about 3 percent before leaving office. Under Anwar Ibrahim, that hard-won progress has reversed.

Persistent shortfalls mean heavier borrowing. Malaysia’s debt-to-GDP ratio has climbed to around 64 percent. Analysts warn that his populist approach, raising expenditure while delaying reforms, will limit fiscal flexibility. Excessive operating costs without visible productivity gains trap the government in a debt cycle that weakens its credibility with both local and foreign creditors.

The Unbalanced U.S. Deal

At the ASEAN Summit in October 2025, Anwar Ibrahim signed a reciprocal trade agreement with Donald Trump’s administration. Despite its name, the deal heavily favors the United States. Malaysia must import more American goods such as machinery, electronics, and LNG, while Washington maintains tariffs of 19 percent on Malaysian exports. The agreement also includes clauses that could align Malaysia with U.S. sanctions against third countries, sparking fears about sovereignty and neutrality.

Critics call this deal a diplomatic misstep. Instead of securing fair market access, Malaysia now faces obligations without equal benefit. His government and stalwarts of Anwar Ibrahim defend the pact as strategic, yet tangible gains are scarce. The trade imbalance exposes weak negotiation and overreliance on public relations to sell poor outcomes.

Headlines Over Results

Anwar Ibrahim excels at publicity. His speeches and social media campaigns create a polished image of progress. However, analysts, economists, and investors focus on numbers, not narratives. Deficits remain wide, the ringgit stays weak, and investor sentiment continues to slide. His communication style may win praise online, but financial markets demand data and discipline. Investors measure credibility by fiscal results, not viral posts.

Economic Fallout

Malaysia’s economic indicators continue to weaken under the watch of Anwar Ibrahim. The stock market lags behind regional peers, while growth is projected at only 4.2 percent next year. Inflation, though moderate, squeezes household budgets. Private sector hiring is stagnant, and household debt remains high. Reliance on borrowing leaves Malaysia vulnerable to global shocks. Bureaucracy and political compromise have slowed reform, creating uncertainty in both domestic and foreign markets.

Comparing Leadership

Najib Razak’s years, despite controversy, saw fiscal consolidation and clearer economic direction. The leadership of Anwar Ibrahim offers the opposite, lofty promises but inconsistent delivery. His administration has failed to restore investor confidence, contain spending, or strengthen the currency. The focus on image has overshadowed substance, leaving Malaysia exposed to further decline.

The Way Forward

To restore credibility, the prime minister must act decisively. Fiscal reform, spending restraint, and transparent governance are crucial. Trade policy must prioritize Malaysia’s interests and preserve independence. Investor confidence depends on visible, measurable progress, not announcements.

If Anwar Ibrahim continues to prioritize publicity over performance, Malaysia risks deeper stagnation. Capital flight will persist, deficits will widen, and policy influence will erode. For Malaysia to recover, leadership must shift from public relations to practical action.