As Malaysia approaches 2025, various forecasts present a nuanced picture of its economic growth. Affin Group has projected Malaysia's GDP growth at 5.2% for 2025, an increase from 5.0% in 2024. This growth is expected to be driven by a rise in oil prices, anticipated to reach US$75 (RM335) per barrel, up from US$74 [93911724]. Datuk Wan Razly Abdullah, president and CEO of Affin Group, also predicts a strengthening of the Malaysian Ringgit to RM4.10 against the US Dollar from the current RM4.47, alongside a projected 13% rise in the Kuala Lumpur Composite Index (KLCI) to 1,850 [93911724].
In contrast, Kenanga Investment Bank has forecast Malaysia's GDP growth to moderate to 4.8% in 2025, down from 5.0% in 2024. This projection comes despite a strong rebound in exports, which surged by 16.9% in December 2024, significantly exceeding expectations. The full-year exports for 2024 rebounded by 5.7% after an 8.0% decline in 2023, driven by strong demand from Singapore (44.4%) and China (9.6%), although exports to Japan saw a decline of 6.0% [a4bee29d].
Adding to the mix, AmBank Group has projected Malaysia's GDP growth to further moderate to 4.6% in 2025 from an estimated 5.0% in 2024. Chief economist Firdaos Rosli cites infrastructure projects, private investments, and strong private consumption as key supports for growth. Notably, there has been double-digit growth in gross fixed capital formation for two consecutive quarters through Q3 2024, with significant approved private investments amounting to RM1.2 trillion from 2021 to September 2024. Key projects include the East Coast Rail Link, Pan-Borneo Highway, Nenggiri Hydroelectric Plant, Johor-Singapore Special Economic Zone, and new data centres [f78cfda0].
In a recent update, MARC Ratings has aligned its advanced GDP growth estimate for 2024 at 5.1%, driven by robust domestic demand and strong consumer spending. Despite the decline in exports to China, December exports rose by 16.9% [15969f29]. Malaysia's imports also rose by 11.9% in December 2024, contributing to a trade surplus that widened to RM19.2 billion for the month, totaling RM136.9 billion for the year [a4bee29d]. Kenanga maintains a 2025 export growth forecast of 5.0%, fueled by strong investments and global tech demand, although risks remain due to uncertainties in China's demand and potential slowdowns in global semiconductor sales [a4bee29d]. AmBank also noted a short-term export boost due to frontloading activities, with exports to the US increasing since late 2023, accounting for 13.1% of Malaysia's total exports. However, challenges loom from higher US tariffs and subdued demand in key markets like China and the EU [f78cfda0].
Both forecasts reflect a cautious optimism regarding Malaysia's economic prospects amidst global uncertainties. Sabah Finance Minister Masidi Manjun has expressed a similar sentiment, emphasizing the need for careful monitoring of economic indicators as the year progresses [93911724]. Bank Negara Malaysia is expected to maintain the overnight policy rate at 3% in 2025, with inflation projected at 2.6% for the year [15969f29]. As these projections unfold, the interplay between manufacturing performance, consumer behavior, and broader economic indicators will be crucial in shaping Malaysia's economic future.