AmBank: Malaysia's GDP Growth To Moderate To 4.6 Pct In 2025

KUALA LUMPUR, Jan 24 (Bernama) -- AmBank Group projects Malaysia’s gross domestic product (GDP) growth to moderate to 4.6 per cent in 2025 compared to the estimated 5.0 per cent in 2024. 

Chief economist Firdaos Rosli said the growth will be supported by infrastructure projects, the realisation of private investments, and strong private consumption.

“However, we believe the government is facing a delicate trade-off between fiscal consolidation and growth prospects amid a volatile external environment,” he said at a media briefing on the Macroeconomic Outlook here, today.

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He noted that the investment upcycle is already underway as evidenced by gross fixed capital formation, posting double-digit growth for two consecutive quarters through the third quarter of 2024. 

This has significantly contributed to Malaysia’s GDP growth acceleration last year.

Firdaos anticipates the relatively strong investment growth to persist in 2025, supported by technological advancements, infrastructure projects, and initiatives such as the New Industrial Master Plan (NIMP) 2030 and the National Energy Transition Roadmap, albeit at a slower pace compared to 2024.

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“Although no new mega projects were announced in Budget 2025, the ongoing implementation of infrastructure projects and the realisation of significant approved private investments (RM1.2 trillion from 2021 to September 2024) will help sustain the investment momentum,” he said.

Key projects contributing to this momentum include the East Coast Rail Link, the Pan-Borneo Highway, the Nenggiri Hydroelectric Plant, the Johor-Singapore Special Economic Zone, and new data centres.

In the short term, Firdaos said that Malaysia’s exports would receive a temporary boost due to frontloading activities ahead of the anticipated tariff implementation, propelling growth into early 2025, supported by strong domestic demand. 

Exports to the US, which have been on an uptrend since late 2023, have also helped mitigate the decline in exports to other countries.

However, he acknowledged that the positive contribution of exports to net exports will be partially offset by the continued growth of imports of capital goods, driven by the ongoing investment upcycle.

Looking ahead, Firdaos warned of potential challenges to Malaysia’s export performance from higher US tariffs. 

“The direct impact could be notable, given that the US accounts for 13.1 per cent of Malaysia’s total exports, though it may be less significant than many fear,” he said.

He added, “We believe the impact on exports could be limited if the US economy remains strong as US importers and consumers actively trade despite higher tariffs, ensuring robust market activity.”

Nevertheless, trade headwinds could emerge from subdued demand in key export markets like China and the European Union, both of which are facing weak economic conditions and heightened trade barriers.

“With import growth also expected to moderate, we do not foresee a significant drag from net exports on overall growth,” Firdaos added.

-- BERNAMA