Alliance Bank Malaysia Berhad (“Alliance Bank” or “the Bank”) expresses a positive outlook on Malaysia’s economy in 2025. Malaysia’s economy is poised for growth in 2025 as domestic demand is likely to strengthen further with sustained consumer spending and an ongoing increase in investment activities. Its strong fundamentals and diversified economic structure, coupled with renewed government focus on spurring higher economic growth, will help ensure Malaysia’s growth trajectory remains on the uptrend.
The Bank anticipates Malaysia will achieve firm GDP growth in 2025, aligning with the government’s 2025 GDP growth projection. To date, Malaysia’s economy in 2024 has exceeded expectations. The first nine months of 2024 (9M2024) saw GDP growth of 5.2%, putting it on track to achieve the government’s revised projection of 4.8%-5.3% (up from 4.0%-5.0% previously). Meanwhile, the 2025 growth projection has been guided at 4.5%-5.5%, indicating a sustained growth trajectory.
Malaysia’s economic growth momentum continues to be underpinned by a 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% as of October 2024. This should bode well for Malaysia, given that domestic demand forms the bulk of our economy,” said Mr Kellee Kam Chee Khiong, Group Chief Executive Officer of Alliance Bank.
Meanwhile, private investment is expected to benefit from an improved external environment, while the government continues with its expansionary fiscal policy to drive economic growth. In the third quarter of 2024 (3Q24), 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. Key downside risks include a slower-than-expected recovery in external demand and heightened geopolitical tensions.
By assuming the Chairmanship of ASEAN for 2025, 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). Shifting patterns and priorities in global FDI, 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 the global supply chain underscores its competitive advantage in positioning itself as a partner for multinational companies.
The Johor-Singapore Special Economic Zone (JS-SEZ) exemplifies the potential of cross-border collaboration in the region. Further progress is expected in 2025, with more initiatives to facilitate investment and trade as well as smoother transfer of people and goods within the JS-SEZ.
“We are confident the nation’s economy will continue its growth momentum, bolstered by the Madani Economy Framework, which reflects the goals of achieving a progressive, inclusive and dynamic economy. With Malaysia’s encouraging economic performance and fiscal reforms underway, we believe the ASEAN Chairmanship and JS-SEZ come at an opportune time for Malaysia to further propel its economic growth and raise the country’s profile,” added Mr Kam.