Unpacking Malaysia^s Economic Growth: The Role of FDI, Inflation, and Oil Price Volatility MUHAMMAD AFFEIF BIN MOHD AZZARAIN, AMIR IMRAN ZAINODDIN, OSWALD TIMOTHY EDWARD*
Universiti Teknologi MARA Malaysia
Abstract
This study examines the influence of key macroeconomic factors on Malaysia^s Gross Domestic Product (GDP), with a particular focus on the dynamic interplay between inflation, foreign direct investment (FDI), and global oil prices. As a rapidly developing economy in Southeast Asia, Malaysia^s GDP functions as a vital barometer of national economic performance, encapsulating the aggregate value of goods and services produced domestically. Utilizing a quantitative research methodology, the study analyzes a 30-year data set through correlation and regression analyses to assess the strength and direction of relationships between these macroeconomic indicators and GDP growth. The empirical findings reveal a statistically significant positive correlation between FDI and GDP, indicating that a 1% increase in FDI is associated with a 1.48% rise in GDP. In contrast, inflation emerges as a destabilizing factor, potentially curbing consumer spending and hindering economic expansion. Oil price volatility, while not directly quantified, is identified as a critical variable influencing both inflation and investor confidence. The study underscores the pivotal role of sound fiscal and monetary policies in mitigating inflationary pressures and creating an enabling environment for sustained foreign investment inflows. The insights generated hold substantial implications for policymakers, offering evidence-based guidance for formulating economic strategies aimed at fostering long-term, inclusive growth. Future research is recommended to incorporate additional macroeconomic variables, such as exchange rates and interest rates, and to explore their cumulative impact on GDP over extended periods, thereby enriching the understanding of Malaysia^s economic resilience and trajectory.
