Malaysia’s Economy Projected to Grow by Up to 5.5% in 2025

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According to the Economic Outlook 2025 report, Malaysia’s economy is forecast to expand by 4.5% to 5.5% in 2025. The growth will be supported by a resilient external sector and strong domestic demand, positioning the country for sustained economic expansion.

Key Growth Drivers

The report highlights that global trade recovery and increased demand for electrical and electronic (E&E) goods will play a crucial role in bolstering Malaysia’s economic performance. Malaysia’s strategic position within the global semiconductor supply chain is expected to boost its export-oriented industries, particularly in the E&E sector.

Domestically, private sector expenditure will fuel growth through robust consumer demand and investment. The ongoing implementation of key national master plans and development initiatives will further support this expansion.

Sectoral Contributions to Growth

On the supply side, the services sector remains the primary driver of growth, powered by the continued recovery in tourism activities, steady exports, and a boost in information and communication technology (ICT) activities. The report expects the tourism-related industries—such as food and beverages (F&B), accommodation, and retail trade—to grow further, with wholesale trade and transportation (air and water) segments also benefitting from sustained trade activities.

ICT development, especially the expansion of data centres, will spur growth in industries like utilities and professional services. The manufacturing sector is projected to experience further expansion, with the electrical and electronics industries performing particularly well as global demand for semiconductors continues to rise.

The report also forecasts continued strength in domestic-oriented industries in line with higher domestic consumption and investment, while the construction sector is set to grow across all subsectors.

Improved Employment and Wage Growth

On the income side, employee compensation is expected to grow, supported by the implementation of the new minimum wage rate and upward salary revisions for civil servants. This wage growth and sustained economic expansion will create better employment opportunities for Malaysians.

Risks and Global Challenges

Despite the positive outlook, the report notes that Malaysia’s open economy remains vulnerable to global uncertainties. These include geopolitical tensions, supply chain disruptions, financial market volatility, and varying growth prospects across economies.

To mitigate these risks, the government is committed to implementing pragmatic measures and initiatives to strengthen the economy and ensure continuous growth.

By balancing external opportunities with strong domestic policies, Malaysia is positioned for solid economic performance heading into 2025. Both exports and domestic consumption play vital roles in driving growth.