PETALING JAYA: There is growing optimism that Malaysia’s economy has closed 2025 on a stronger-than-expected note.
According to local research houses, this comes after advance gross domestic product (GDP) estimates showed broad-based growth in the fourth quarter of last year (4Q25), driven by resilient domestic demand and robust activity across key sectors
TA Research said it now aligned with the official advance 4Q25 GDP estimate of 5.7%, bringing full-year 2025 growth to 4.9%, compared with 5.1% in 2024.
However, the brokerage cautioned that some risks remain.
“Some uncertainty remains, particularly pending greater clarity on December activity data, which could still result in marginal adjustments to the headline figure,” TA Research said.
“For 2026, we maintain our GDP growth forecast range of 4.3% to 4.7%, supported by resilient domestic demand, underpinned by Visit Malaysia 2026 (VM2026) initiatives, steady income and employment growth, and a continued recovery in external trade performance,” it added.
Data from the Statistics Department showed advance GDP rose 5.7% year-on-year (y-o-y) in 4Q25, up from 5.2% in the previous quarter, marking the fastest quarterly expansion since 4Q22.
According to the advance estimates, the broad-based expansion reflected strong performance in services and manufacturing, while mining lagged due to production constraints and maintenance disruptions.
Final 4Q25 and full-year GDP data are expected on Feb 13.
One analyst said that while the advance numbers are encouraging, the full picture will only emerge with the final data, which could slightly adjust the headline growth.
“Markets will be closely watching the final GDP release next month, as even small revisions could influence expectations for monetary policy and investor sentiment,” the analyst from a local brokerage pointed out.
Highlighting the upside surprise, Hong Leong Investment Bank (HLIB) Research noted that the advance 4Q25 GDP exceeded both its forecast and the consensus median estimate of 5.4%.
It added that full-year growth was marginally above its forecast and the upper bound of the Finance Ministry’s official target of 4.8%.
HLIB Research maintained its 2026 GDP growth forecast at 4.5%, citing healthy investment momentum and improving tourism.
It anticipates investment momentum to remain healthy, while the tourism sector continues to improve, though the bold full-year 2025 target of 31.4 million tourist arrivals now appears unattainable.
Tourist arrivals increased to 24.01 million in the first 11 months of 2025 from 22.46 million over the same period in 2024.
HLIB Research said private consumption is expected to benefit from favourable labour market conditions and supportive policy measures, such as targeted cash transfers, including Sumbangan Asas Rahmah or Sara, as well as civil servant salary hikes.
However, it cautioned that external uncertainties, including US trade tariffs and geopolitical tensions, would continue to cloud the outlook.
Meanwhile, CIMB Research sees the advance 4Q25 GDP estimates as lifting annual growth to 4.9%.
As such the brokerage revised its 2026 GDP growth projection to 4.4%, citing strength in services and construction, balanced by moderation in manufacturing.
“Looking ahead, we expect the strong momentum in the services sector to be carried into 2026 on the back of the second round of civil servant salary hikes and the February 2026 disbursement of Sara for all, as well as VM2026.
“This will likely be tempered by a slowdown in the manufacturing sector as demand for exports weakens,” it added.
Maybank Investment Bank Research (Maybank IB) noted that the strong advance GDP estimate for 4Q25 was in line with its high-frequency monthly indicators.
“The above-5% growth last quarter was flagged by our monthly GDP estimates that averaged 5.7% y-o-y for October-November 2025,” it said, noting that domestic demand remained resilient, underpinned by steady income growth and a continuing investment upcycle.
However, it added that despite faster external trade growth in October-November 2025, export value and volume growth trailed the resurgent imports value/volume growth, resulting in a narrower trade surplus.
“That implies a smaller/negative contribution of net external demand to GDP growth,” it pointed out.
