Kuala Lumpur: Malaysia's economic growth is expected to remain solid at 4.9 per cent year-on-year (y-o-y) in 2025, according to local investment banks. The banks noted that this forecast aligns with the Ministry of Finance's (MoF) official target of 4.5 to 5.5 per cent gross domestic product (GDP) growth for the year.
According to BERNAMA News Agency, Malaysia's economic growth accelerated to 5.1 per cent in 2024 from 3.6 per cent in 2023. This acceleration was propelled by strong domestic demand, continued investment activity, and a recovering external sector.
Hong Leong Investment Bank Bhd (HLIB) highlighted that the country's GDP growth is anticipated to stay strong but moderate slightly to 4.9 per cent y-o-y in 2025. This growth is primarily supported by sustained household spending, underpinned by a strong labour market. The projection is further bolstered by income measures, including increases in national wages and higher cash handouts, estimated at RM13 billion in 2025, up from RM10 billion in 2024.
HLIB also pointed out that withdrawals from the Employees Provident Fund Account 3, along with higher realisation of foreign direct investments (FDI) projects and continued tourism activities, will contribute to overall growth. The bank maintained its overnight policy rate (OPR) expectation at three per cent throughout the year, as domestic growth is expected to remain stable, while inflationary pressures are anticipated to rise. Bank Negara Malaysia sees potential risks to growth from factors such as a greater spillover from the tech upcycle, higher tourism activities, and faster implementation of projects.
Similarly, Maybank Investment Bank Bhd (Maybank IB) also maintained its 2025 real GDP growth forecast of 4.9 per cent. While the ongoing recovery in global semiconductor sales and the tourism sector supports exports of goods and services, Maybank IB remains cautious about external risks and uncertainties stemming from United States trade policies and tariff measures under President Donald Trump's second term.
Domestically, several factors provide support and mitigation, including the ongoing investment upcycle and the realisation of robust private sector investments approved since 2021. Additionally, Budget 2025 measures aimed at boosting workers' income, such as increases in civil service salaries, pensions, and the minimum wage, along with higher allocations for cash handouts to lower-income groups and expanded personal income tax reliefs, are expected to sustain consumer spending growth.