Malaysia Demographics: Impact on Family Planning

Why Malaysians Are Having Fewer Children: The Cost of Living Crisis Behind a Demographic Shift

Samuel Chua

30th July 2025 - 6 min read

For a growing number of young Malaysians, the dream of starting a family is being put on hold. The unfolding demographic crisis is not due to a lack of desire, but rather a response to pressing economic realities. Deputy Women, Family and Community Development Minister Datuk Seri Dr Noraini Ahmad cited a report by the United Nations Population Fund (UNFPA), which said nearly one in five adults across 14 countries acknowledged they may not be able to have the number of children they desire.

“Of this group, 39% cited financial constraints as the main barrier, including the cost of living, childcare, housing and job insecurity. This is where our responsibility lies: to listen, understand, and act,” she said.

This issue is not just about family planning. It is about Malaysia’s future. Rising living costs are contributing to lower birth rates, which in turn accelerate ageing and population shrinkage.

According to the McKinsey Global Institute, countries facing these demographic changes are entering unfamiliar territory. Without action, younger generations will face slower economic growth and carry the financial load of supporting more retirees. This will erode the traditional flow of wealth between generations and force societies to rethink long-standing work structures and social contracts. To avoid long-term population decline, countries will ultimately need to increase fertility rates, a challenge that has no precedent in modern history.

Malaysia’s Fertility Rate Is Falling Fast

The national statistics paint a clear picture of Malaysia’s demographic shift. The country’s Total Fertility Rate (TFR), which is the average number of children born to a woman over her lifetime, has fallen to 1.7, a figure well below the 2.1 needed to naturally replace the population. This trend is accelerating, with data from the Department of Statistics Malaysia (DOSM) showing that the number of live births dropped by a sharp 11.5% in the first quarter of 2025 compared to the same period last year.

These national averages, however, mask a deeper story of two very different demographic trends within the country. A significant divide exists between different states and communities. For instance, while states like Terengganu and Kelantan maintain fertility rates above the replacement level, highly urbanised centres such as Kuala Lumpur and Penang report rates as low as 1.2 children per woman [PDF]. This disparity is also reflected across ethnic groups, with the Malay community’s fertility rate at the replacement level of 2.1, while the Chinese and Indian communities report significantly lower rates at 0.8 and 1.3, respectively.

Rising Costs Are Changing Family Decisions

The decision to delay or limit family size is overwhelmingly driven by economic pressures. Experts and government officials agree that the high cost of living is a primary factor impacting fertility rates. This financial strain is not abstract; it is composed of tangible, everyday burdens that young couples must navigate.

The cost of housing is a major component of this financial strain. According to the Khazanah Research Institute, Malaysia’s housing market has been described as “seriously unaffordable”, with home prices having grown at more than double the rate of median household income in recent years. This pressure directly influences family planning, as Malaysian academics confirm that the high cost of housing contributes to couples delaying having children.

According to BNM, this challenge is made more difficult by the fact that, for many, wages have not kept up with rising costs. In its 2024 Economic and Monetary Review, BNM stated: “Real wage growth has remained below inflation in several sectors, limiting household purchasing power.”

This creates a widening gap between income and the cost of living, forcing many to postpone major life events like marriage.

A Glimpse into Malaysia’s Future Horizon

Official projections provide a clear timeline for the country’s demographic future, adding a sense of urgency to the current trends. According to the Department of Statistics Malaysia, the nation’s population is forecast to continue growing for several more decades, reaching a peak of 42.38 million in the year 2059[PDF]. After this point, a slow but steady decline is expected to begin.

However, a more critical demographic turning point is projected to arrive even sooner. The same official report indicates that the country will enter a new demographic phase in 2052, when the crude death rate is projected to exceed the crude birth rate. This milestone, occurring seven years before the population peak, marks the true structural shift. It significantly shortens the window for effective policy action to address the long-term challenges of population decline.

The Domino Effect and the Risks Ahead

The consequences of a slowing birth rate and an ageing population are far-reaching, posing significant risks to the nation’s economic and social stability. These risks are interconnected and could create a cycle of challenges for future generations.

Economically, the country faces significant headwinds. A shrinking proportion of the working-age population[PDF], projected to decline after 2030, threatens to create labour shortages and act as a drag on economic growth. This could impact overall productivity and hinder the nation’s long-term growth prospects.

Financially, the nation is heading toward a fiscal time bomb. An aging population will demand greater public spending on healthcare and social support, even as the working-age tax base continues to shrink. This challenge is further exacerbated by a looming retirement savings crisis. According to the Employees’ Provident Fund (EPF), a significant portion of contributors have savings far below the amount considered adequate for a secure retirement.

Socially, the fabric of Malaysian society is set to transform. The country is on a rapid path to becoming an aged society by 2048, defined as having 14% of the population aged 65 and above. By 2060, major cities like Kuala Lumpur are projected to become super-aged, with more than 21% of residents falling into that category. These thresholds, used by the United Nations, mark significant societal shifts that will reshape how healthcare, employment, and eldercare systems function.

Charting a Constructive Path Forward

Addressing these demographic challenges requires a forward-looking and comprehensive strategy. The focus must be twofold: first, to ease the economic burdens that are limiting family choices, and second, to prepare for the now-inevitable reality of an older society.

Policies that make parenthood more affordable are essential. This includes investing in accessible childcare, offering paid parental leave for both parents, and creating family-friendly workplace environments that support working mothers and fathers. At the same time, Malaysia must prepare for its ageing future by strengthening social protection systems and retirement security.

A critical part of this preparation involves a coordinated investment in building a national care economy, ensuring that there are sufficient facilities and trained professionals to support a growing elderly population. By taking proactive steps now, Malaysia can navigate its demographic crossroads and build a resilient and supportive society for all generations.

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