PETALING JAYA: Economic growth for the year is likely to be in the upper end of the government’s forecast of 4.3% to 4.8%, supported by resilient domestic consumption amid continued benefits from the rollout of infrastructure projects.
The government released third quarter of financial year 2025 (3Q25) growth as measured by gross domestic product (GDP) that largely met market expectations at 5.2% year-on-year (y-o-y), with year-to-date GDP at 4.7%.
Economists expect domestic consumption to continue supporting the economy, but cautioned that external uncertainties weighed on the outlook.
Most believe that GDP for the year would likely expand to the upper end of the government’s range.
They also pointed to the rise in the current account surplus to 2.5% of GDP on gains from exports and tourism receipts amid lower imports of goods and services.
They said lower imports indicate slower growth momentum.
TA Research said “domestic fundamentals are expected to act as critical counterweights to external pressures” in the final quarter.
“As such, we expect the economy to maintain a growth rate of around 4.7% y-o-y in 4Q25.”
The research house said Bank Negara Malaysia (BNM) expects the overall balance of risks to growth as broadly even and supported by positive momentum.
“BNM does not expect a sharp or immediate decline in export demand despite external uncertainties,” it said.
BIMB Securities expects US tariffs to reshape Asia’s trade landscape in 4Q25 and into 2026, diverting production toward Vietnam, Malaysia and India while putting pressure on China’s supply chains and regional exporters linked to its ecosystem.
“Asean’s manufacturing and logistics hubs are likely to benefit selectively, though second-round effects from slower global trade could limit the overall upside.
“In short, Singapore is slowing, Vietnam is accelerating and China is adjusting under a new trade order,” it added.
CGS International Research projects the domestic economy to progress well going into 2026.
“Budget 2026 could help to sustain consumption through civil servant salary reforms phase two, higher cash handout allocations, higher tourism spending, as well as the continuance of the targeted fuel subsidy,” it said.
“Meanwhile, the country is still benefiting from infrastructure upgrades, such as airports, the Trans-Borneo Highway, the Penang Light Rail Transit, data centres and flood mitigation projects which could see larger contribution towards construction,” it said, adding that concerns largely reflected external uncertainties.
CIMB Research projects GDP to remain firm at least through 1Q26 supported by festive spending and the mid-February RM100 cash transfer for Malaysian adults, keeping private consumption resilient.
