Kenanga Research expects a stable labour market throughout 2025, mainly supported by steady domestic demand.
PETALING JAYA: The latest labour market indicators suggest continued resilience with minimal impact observed for now, according to Hong Leong Investment Bank (HLIB) Research.
In a report, the research house expects the country’s economic growth to remain underpinned by sustained domestic demand, supported by continued employment and wage gains and a proactive policy stance which will cushion the impact of global uncertainties.
“Nevertheless, downside risks persist, stemming from uncertainty surrounding the outcome of trade negotiations with the United States and demand conditions of key trading partners.
“As such, we maintain our 2025 gross domestic product (GDP) growth forecast at 4%,” the research house pointed out in a report.
According to HLIB Research, the country’s labour market showed continued improvement in March, underpinned by sustained growth in domestic demand and better export performance.
The number of unemployed persons saw larger declines and consequently, the unemployment rate held steady at 3.1%, it said.
Meanwhile Kenanga Research, in its report to clients, expects a stable labour market throughout 2025, mainly supported by steady domestic demand.
Key drivers include higher minimum wages and public sector salaries, which will lift private consumption, the research house said.
“Investment is also expected to remain robust, steered by various national policy initiatives, record-high approved investments last year, and continued federal government spending under Budget 2025,” the research house added.
On the supply side, it expects the services sector to continue expanding, led by tourism-related activities and a likely boost from the influx of tourists from China and regional economies.
“We project the first quarter of 2025 (1Q25) GDP growth to be at 4.9% (4Q24: 5%), slightly lower than the previous quarter, though higher than the government’s estimates of 4.4%.
“We believe there is some upside to 1Q25 growth given the better-than-expected March’s Industrial Production Index’s numbers.
“Our 2025 GDP forecast remains at 4.8% (2024: 5.1%) despite global trade uncertainties, as we anticipate Malaysia to gain from trade and investment diversion, along with continued domestic resilience,” it said.
Kenanga Research added that globally, there was a mixed performance when it came to unemployment rates among the advanced economies like the United States and Japan.
