Small Medium Enterprise Development Bank Malaysia (SME Bank) has projected Malaysia's GDP growth to range between 4.5% and 5% in 2025, supported by the robust Madani Economy framework and a positive economic outlook.
Key Highlights:
2024 Growth Performance: Malaysia’s GDP grew 5.1% in 2024, exceeding the bank’s forecast of 4.3% to 5.3%. The growth was driven by strong household spending, favourable labor market conditions, robust investment, and a recovery in external trade.
2025 Growth Outlook: SME Bank’s Acting CEO, Datuk Dr Mohammad Hardee Ibrahim, expects GDP growth for 2025 to remain strong, between 4.5% and 5%, continuing the positive momentum seen in 2024.
Sectoral Growth: The construction sector is anticipated to lead in 2025 with double-digit growth, building on its strong performance since 2023. The manufacturing sector is also expected to grow, driven by major initiatives like the New Industrial Master Plan 2030, National Energy Transition Roadmap, and National Semiconductor Strategy.
Services Sector as Growth Driver: Lynette Lee Li Qing, SME Bank’s Chief Economist, emphasized that the services sector will remain the primary driver of Malaysia’s economy in 2025, with growth supported by both consumer and business subsectors.
External Risks: Despite the positive outlook, Lee highlighted risks such as slower GDP growth in major trading partners, the potential escalation of the U.S.-China trade war, and rising global protectionism. Other challenges include volatile geopolitical conflicts and lower-than-expected commodity production.
Global Growth Outlook: SME Bank’s forecast aligns with the World Bank’s projection, which expects global growth to stabilize at 2.7% in 2025 and 2026, supported by easing inflation, lower commodity prices, and monetary easing in both advanced and emerging economies.
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