Kuala Lumpur: MIDF Amanah Investment Bank Bhd anticipates Malaysia's GDP to grow at a moderate rate of 4.0 percent in 2025, a decrease from the projected 5.1 percent in 2024. This forecast is attributed to ongoing increases in domestic spending, as detailed in a research note released by the investment bank today.

According to BERNAMA News Agency, the projection assumes a slower pace of growth in external trade, influenced by an anticipated decline in demand from major markets such as the United States, following recent tariff hikes by the US government. Despite potential challenges from intensified trade tensions, MIDF Amanah expects Malaysia's growth to be sustained by strong domestic consumption driven by positive labor market conditions, rising income levels, continued government cash assistance programs, and increased tourist spending.

The investment bank cautions that policy uncertainties and significantly weaker external demand could further constrain activities in export-oriented sectors, including manufacturing, mining, and agriculture. However, MIDF Amanah believes there is currently no need for policy easing, although both Bank Negara Malaysia and the government have room to support the economy if growth momentum weakens significantly.

While Malaysia's economy is projected to maintain a moderate growth rate, the momentum is likely to soften. In February 2025, the leading index (LI) remained unchanged year-on-year, whereas the coincident index registered a stronger growth of 2.0 percent year-on-year, reaching 127.2 points. The Department of Statistics Malaysia reports that the annual performance of the LI recorded 112.4 points in February 2025, reflecting a marginal decline of 0.004 points, largely due to a sharp contraction in the Number of Housing Units Approved (-34.5 percent) and the Real Imports of Other Basic Precious and Other Non-ferrous Metals (-21.5 percent).

MIDF Amanah emphasizes that, amid challenges from higher tariffs and potentially weaker external demand, robust domestic demand, resilient household spending, and increased investments are expected to bolster national economic growth in the coming year.