PETALING JAYA: Alliance Bank Malaysia Bhd said Malaysia’s economy is poised for growth in 2025 as domestic demand is likely to strengthen further with sustained consumer spending and ongoing increase in investment activities.
“Its strong fundamentals and diversified economic structure, coupled with renewed government focus to spur higher economic growth will help ensure Malaysia’s growth trajectory remains on the uptrend,” it said.
The bank expects Malaysia to achieve firm gross domestic product (GDP) growth in 2025 aligning with the government’s projection. Malaysia’s economy in 2024 exceeded expectations. with GDP growth for the first nine months at 5.2%, on track to achieve the government’s revised projection of 4.8%-5.3% (from 4%-5% previously) while 2025 growth projection was guided at 4.5%-5.5%, indicating a sustained growth trajectory.
Malaysia’s economic growth momentum continues to be underpinned by the robust employment market which has been growing from strength to strength.
“We are encouraged by the country’s improving unemployment rate of 3.2% and the increasing labour force participation rate of 70.5% in October 2024. This should bode well for Malaysia, given that domestic demand forms the bulk of our economy,” said Alliance Bank group CEO Kellee Kam Chee Khiong.
Meanwhile, he said, private investment is expected to benefit from the improved external environment while the government continues with its expansionary fiscal policy to drive economic growth. Third-quarter 2024 capital expenditure increased to a multi-year high growth of 15.3%, signifying the positive impact arising from approved investments in 2021-2023 and various government-led strategic developments.
This underlines the robust prospects of an investment upcycle in Malaysia which will continue to provide further tailwinds in 2025, Kam said, adding that key downside risks include slower-than-expected recovery in external demand and heightened geopolitical tensions.
By assuming the chairmanship of Asean for 2025, Kam said, Malaysia is well positioned to enhance its global standing. Asean has consistently proven its resilience and appeal as a leading destination for foreign direct investment (FDI). The shifting patterns and priorities in global FDI, he added, particularly the growing focus on digital and renewable energy, are evident in the region.
More importantly, Asean’s rising prominence as a major hub for global supply chain underscores its competitive advantage in positioning itself as a partner for multinational companies, Kam said.
“The Johor-Singapore Special Economic Zone (JS-SEZ) exemplifies the potential of cross-border collaboration in the region. We expect further progress in 2025 with more initiatives facilitating investment and trade as well as smoother transfer of people and goods in the JS-SEZ to be announced,” he added .
“We are confident the nation’s economy will continue its growth momentum, bolstered by the Madani Economy Framework which reflects the goals to achieve a progressive, inclusive and dynamic economy. With Malaysia’s encouraging economic performance and fiscal reforms under way, we believe the Asean chairmanship and JS-SEZ comes at an opportune time for Malaysia to further propel its economic growth and raise the country’s profile,” said Kam.
