KUALA LUMPUR: Malaysia’s growth for 2025 will probably exceed the earlier projection following stronger-than-expected third-quarter growth and resilient domestic demand despite global headwinds, according to the World Bank’s lead economist for Malaysia, Dr Apurva Sanghi.
He said the Malaysian economy shows solid momentum after posting a robust 5.2% expansion in the third quarter, the strongest quarterly performance so far this year.
“We are going to update the forecast. So the last time we did a forecast, we did not have the benefit of third quarter numbers which have come quite strong. So let’s see what the fourth quarter numbers are. We will do our next upgrade in April. But it’s great news that all three quarters have shown pretty resilient growth this year,” he told reporters at the National Economic Outlook Conference organised by the Malaysian Institute of Economic Research today.
Apurva said the World Bank will revise its official 2025 as well as 2026 gross domestic product (GDP) projections in April once fourth-quarter 2025 figures become available.
Based on Q3 data of 5.2%, 4.4% in Q2, and 4.4% in Q1, it gives a cumulative 4.7% growth for the first nine months of 2025.
According to the most recent public statements from the World Bank in October, its forecast for Malaysia’s real GDP growth in 2025 is 4.1%.
Apurva noted that Malaysia’s ability to sustain around 4%-plus annual growth is “hugely positive” at a time when the global economy is grappling with slowing investment, rising debt and weak external demand.
He cautioned, however, that 2026 will be the real test, particularly as global growth is expected to weaken further and foreign investment flows into developing economies continue to soften. “This year, external drivers slowed, and domestic demand picked up the slack. The question is how long domestic demand can continue being the main engine. That is why next year will be the real test.”
On foreign investment, Apurva said Malaysia continues to attract inflows even as FDI into developing countries overall has slowed. “In Malaysia, FDI has increased, a lot of it driven by data centres.”
However, he cautioned that headline inflows should not overshadow deeper questions about economic value. “The key question is to what extent data centres contribute to the local economy, in job creation and environmental sustainability. You cannot only look at the headline numbers.”
Apurva said Malaysia’s shift towards high-value sectors and “the right kind of investment” is encouraging, but “the real test is whether it materialises. So far, so good, but let’s see”.
Apurva welcomed the government’s steady approach to subsidy reforms as the government is staying on a positive reform path when it comes to subsidy rationalisation.
“It started with water, then industrial electricity, diesel, and chicken and eggs. It is a well thought-out and well-implemented programme,” he said.
He added that while Budi 95 may be less bold than originally envisaged, the overall trajectory remains appropriate amid a rapidly shifting global environment.
