MALAYSIA’s economy is poised for steady expansion in 2025, with gross domestic product growth projected at 4.4% to 4.8%, building on a strong 4.4% performance in the first half of the year.
This trajectory, aligned with the International Monetary Fund’s updated forecast of 4.5% for 2025 and 4% for 2026, would be underpinned by robust domestic demand, moderate inflation, a favourable labour market, and proactive government policies.
As Asean chair in 2025, Malaysia continues to position itself as a quality investment destination, enhancing wage structures and business efficiency to foster higher labour income shares.
The services sector remains the primary growth engine, expected to expand by 5.1% in 2025, driven by tourism recovery and higher visitor arrivals.
Subsectors like wholesale and retail trade has been projected to grow 4.8%, supported by domestic consumption and expansion in the automotive industry, including electric vehicles.
The report projects the finance and insurance subsector to grow 2.8% amid moderate credit expansion, while transportation and storage could surge 8% on increased air and sea freight from global trade.
Utilities may contract marginally by 0.1% due to lower industrial electricity use, but overall, the sector benefits from progressive visa policies and regional connectivity initiatives for Visit Malaysia 2026.
Manufacturing demonstrates resilience, with 3.9% growth in the first half of 2025, propelled by export-oriented industries like electronics and semiconductors.
Domestic-oriented segments, including consumer goods and construction materials, continue to be supported by household spending and the New Industrial Master Plan 2030, focusing on artificial intelligence-driven edges and digital adoption.
The export industries such as chemicals and rubber products contribution to the economy remains positive while semiconductors benefit from sustained investments and the National Semiconductor Strategy.
Agriculture faces slight expansion at 1.4%, led by palm oil amid favourable weather, though logging and livestock segments lag.
The mining sector, after a 3.9% contraction in early 2025 due to natural gas disruptions, has been forecast to rebound with 6.2% growth.
