Building on its strong economic performance in 2024, Malaysia is poised to maintain its growth momentum into 2025, with the gross domestic product (GDP) projected to expand by up to 6.0 per cent, said an economist.

Despite global uncertainties, economists attributed Malaysia’s positive outlook to strong domestic consumption, key export sectors, sustainability efforts, and its growing role as an investment hub.

Juwai IQI global chief economist Shan Saeed opined that Malaysia’s GDP could grow by 5.0 to 6.0 per cent, assuming consumption and investment patterns will remain strong next year, thus driving macroeconomic stability.

He applauded the government’s proactive move to boost foreign and domestic direct investments (FDI), with Malaysia fast becoming a regional data centre and technological hub on top of a successful semiconductor ecosystem.

“Domestic confidence of local investors is also very strong, and that is why we are able to attract FDI to the country,” he told Bernama.

Private consumption and dynamic private investment collectively contribute over 80 per cent to the nation’s GDP.

Prof Dr Yeah Kim Leng, senior fellow and director of the Economic Studies Programme at the Jeffrey Cheah Institute on Southeast Asia at Sunway University, said sustained consumer confidence, underpinned by rising incomes, low unemployment, and targeted government income support, will fuel private consumption.

“At the same time, robust private investment, which expanded by an impressive 12.1 per cent in the first three quarters of 2024, is expected to remain a formidable growth driver,” he told Bernama.

Yeah said Malaysia is also adopting proactive measures to mitigate external headwinds, including inflationary pressures and supply chain disruptions.

Meanwhile, Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said continuous expansionary fiscal policies would lead to continuous government expenditure, in addition to private sector spending to boost its productive capacity.

“Full employment status would ensure consumers maintain their positive trajectory in spending growth, although they would be more judicious about their appetite to spend given the elevated cost of living,” he said.

Mohd Afzanizam added that externally, a series of interest cuts in many parts of major economies would provide support to global demand, sustaining Malaysia’s export growth.

The International Monetary Fund (IMF) had forecast Malaysia’s real GDP to grow by 4.8 per cent this year from 4.4 per cent in April while maintaining its projection of 4.4 per cent growth in 2025 unchanged.

Globally, the economy is expected to grow by 3.2 per cent in 2025, while ASEAN growth is forecast to be at a robust 4.7 per cent, with the region appearing to have found ways to capture export opportunities generated by Chinese and US tariffs.

Earlier this year, Prime Minister Anwar Ibrahim said Malaysia’s GDP is on track to grow between 4.8 per cent and 5.3 per cent due to the country’s strong performance.

He attributed this to increased household spending.

Malaysia’s GDP grew 4.2 per cent, 5.9 per cent and 5.3 per cent in the year’s first, second, and third quarters, respectively.

Meanwhile, the country’s GDP growth for the first nine months of 2024 was 5.2 per cent, up from 3.8 per cent in the same period in 2023.

The next update for the fourth quarter and full year 2024 GDP is scheduled to be released on February 14, 2025.

Meanwhile, economists also see Malaysia’s assumption of the ASEAN chairmanship as a platform to enhance its global standing.

Yeah, who is also currently the Malaysian Economic Association (MEA) president, said catalysts include landmark projects such as the Singapore-Johor Special Economic Zone and ongoing expansion in data centres and technology-intensive industries, which are anticipated to attract substantial inflows.

“By deepening engagement in regional trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the country is fortifying its market diversification and trade resilience,” he said.

Yeah said there will be opportunities to unlock new trade and investment opportunities for Malaysian enterprises while advancing ASEAN’s collective economic interests.

“Malaysia’s stewardship will not only elevate the region’s economic clout but also position the nation as a focal point for global investment,” he said.

Nevertheless, Yeah noted that challenges loom, particularly in navigating complex geopolitical terrains such as the Myanmar crisis and territorial disputes in the South China Sea.

He underscored the necessity of maintaining ASEAN’s neutrality and cohesion amid intensifying US-China rivalries.

“Malaysia must foster constructive dialogue and consensus to safeguard ASEAN’s unity and prevent fragmentation in the global trading system.

“With ASEAN forecasted to sustain robust annual growth exceeding five per cent, there is confidence in the region’s continued appeal to global investors,” he said.

Shan said ASEAN 2025 will have a meaningful economic and financial impact on all the players involved.

“Malaysia will continue to support the ASEAN economic community so that all members are aligned to make the region more resilient and able to emerge as a stronger regional bloc to drive the growth of the global economy,” he said.

Shan added that he expects Malaysia to continuously benefit from the movement of global companies, such as the Chinese repositioning or relocating to ASEAN nations.

Source: The Star