PETALING JAYA: All eyes will be on the country’s economic growth numbers as Bank Negara and the Statistics Department prepare to release the data for the last quarter of 2024 (4Q24) this Friday.
Economists are generally positive about 2025, expecting the country’s growth to be resilient and underpinned by several positive factors.
Senior economist at UOB Global Economics and Market Research Julia Goh said 4Q24 would likely register a 5% year-on-year (y-o-y) gross domestic product (GDP) growth, fractionally higher than the Statistics Department’s advance estimate of 4.8%.
She told StarBiz that the projected uptick for 4Q24 is to account for seasonal year-end spending and higher manufacturing output in December, as well as gains in net exports.
“For 2025, we project real GDP growth to moderate slightly to 4.7%, edging down from the Statistics Department’s advance estimate of 5.1% for 2024 in light of the uncertainty of US trade policies,” she said.
Goh pointed out there are other domestic levers supporting Malaysia’s growth momentum, such as an expansionary national budget, with total expenditure of RM421bil or 20.2% of GDP, stable labour market conditions and ongoing investments that include RM25bil by government linked-investment companies.
Furthermore, increased tourism activity is anticipated as Malaysia assumes the Asean chairmanship this year.
Energy transition efforts, implementation of national masterplans and regional development will also play positive roles in enhancing economic expansion.
“The Johor-Singapore Special Economic Zone (JS-SEZ) agreement early this month is another key growth driver, as it is widely expected to boost trade and investments,” said Goh.
Citing the chairman of the JS-SEZ Singapore Business Working Group, Singapore Business Federation, Teo Siong Seng, Goh said more than 60 Singapore companies have expressed interest in joining an upcoming business mission to the zone in the middle of this month.
Looking ahead, Ideas economist and research assistant Doris Liew said Malaysia is set to face ongoing worldwide volatility, with external factors such as shifting geopolitical dynamics and economic uncertainties continuing to shape the global landscape.
Despite the challenges, she said Malaysia would remain a critical player in the global manufacturing supply chain, thanks to its strategic position and robust infrastructure.
“However, there is a possibility that global businesses may delay investment decisions as they await clearer policy direction under the Trump presidency.
“This uncertainty could lead to a slowdown in foreign direct investments as companies adopt a cautious approach amid shifting trade policies,” she said.
Specific economic policies such as the potential for new US tariffs could have a significant impact on Malaysia’s economy, according to Liew.
At the onset, the imposition of a 25% tariff on steel and aluminium from the United States could affect Malaysia, which exported US$552mil worth of iron and steel to the United States in 2022.
“While the immediate impact may be limited, given that Malaysia’s steel and aluminium exports constitute a small portion of the overall economy, the introduction of future tariffs, particularly in key sectors like semiconductors, could pose a greater challenge,” said Liew.
She suggested that Malaysia position itself within the global market by enhancing regional connectivity, fostering stronger trade agreements and building domestic economic resilience.
OCBC senior Asean economist Lavanya Venkateswaran expected Malaysia’s 4Q24 GDP to remain unchanged from her advance estimate at 4.8% y-o-y.
She said the December industrial production outcome had remained broadly consistent with advance estimates for manufacturing sector growth.
“For the full year 2024, the economy is likely to have grown 5.1%,” added Lavanya.
She said the higher levels of approved investments in 2024 would likely bear fruit in the coming years depending on the nature of the projects committed to and this in turn bodes well for investment spending in 2025.
She is keeping to her GDP growth forecast of 4.5% for Malaysia, driven by solid domestic demand support and resilient, albeit moderating, export growth.
The strength in household and investment spending will likely sustain into 2025, while export growth in the electrical and electronics sector will remain strong.
Meanwhile, economist Geoffrey Williams is expecting 4Q24 growth to be around 4.6% to 4.8% and full year 2024 expansion to approximate 4.8% to 5%.
He said strong investment levels would take time to impact the GDP and will lend support to growth in 2025.
“The global trade environment will not be hit too much by President Donald Trump’s tariffs which are largely a negotiation position to leverage policy changes.
“Malaysia should not be affected too much directly and might benefit indirectly if there is a transfer of Chinese trade through third party countries,” he said.
Williams observed that overall inflation is at normal historical levels.
“Growth is stable and interest rates are unlikely to change, which sets a good macroeconomic environment, allowing the government to focus on structural reforms.”
