Malaysia economic growth hits 4.9% in 2025, beating forecasts, advance estimate shows
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For 2026, Malaysia's government forecasts growth of 4 to 4.5 per cent amid uncertainties around global trade and tariffs.
PHOTO: EPA
- Malaysia's economy grew by 4.9% in 2025, exceeding government projections of 4%-4.8%, driven by strong domestic demand.
- Q4 2025 saw 5.7% GDP growth, boosted by services, manufacturing, and construction, alongside robust export growth.
- Trade uncertainties and US tariffs may impact future growth; 2026 projection is 4%-4.5%, with potential central bank rate hikes.
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KUALA LUMPUR – Malaysia’s economy likely expanded 4.9 per cent in 2025, beating the government and central bank’s projections, as growth in the final quarter of the year surged on strong performances in key sectors and robust domestic demand.
Gross domestic product grew 5.7 per cent in the October-to-December period from a year earlier, official advance estimates showed on Jan 16, faster than the 5.2 per cent expansion in the third quarter. It was the quickest since the second quarter of 2024 when the economy grew 5.9 per cent.
The economy had been expected to expand between 4 per cent and 4.8 per cent in 2025, slowing from the 5.1 per cent growth recorded in 2024.
Growth in the last three months of 2025 was driven by strength in the main economic sectors, including services, manufacturing and construction, the statistics department said in a statement.
“Economic growth in the fourth quarter of 2025 was also supported by the continued strengthening of domestic demand,” chief statistician Mohd Uzir Mahidin said.
Malaysia’s export growth also remained robust in the quarter, despite trade disruption from the impact of US tariffs.
Exports rose 15.7 per cent on-year in October, before moderating to 7 per cent in November, the department said.
Global trade uncertainty to weigh on economy
The United States has imposed a 19 per cent tariff on most imports from Malaysia. Lingering uncertainties around global trade and tariffs are expected to continue to weigh on the economy, with Malaysia’s government projecting growth of between 4 per cent and 4.5 per cent for 2026.
Final fourth-quarter and 2025 GDP figures are expected to be released on Feb 13.
Analysts expected economic growth to remain firm in the coming months, with Bank Negara Malaysia unlikely to ease monetary policy during the year. The central bank, at its last policy review in November, held its benchmark interest rate at 2.75 per cent, after cutting rates for the first time in five years in July as a pre-emptive measure to head off external uncertainties.
“Overall, with the economy set to remain solid, we think there is little urgency for the central bank to loosen monetary policy in the coming quarters,” Capital Economics Asia economist Shivaan Tandon said in a note.
Barclays economist Brian Tan said he expected Bank Negara Malaysia to turn more hawkish, with a 25-basis-point rate hike to 3 per cent potentially seen in May.
“The increasing evidence that the economy is not only proving resilient but even outperforming is likely to raise questions over whether the pre-emptive July rate cut last year to head off a tariff-induced economic downturn was necessary,” he said. REUTERS
