SME Bank’s 2025 Economic Outlook: Malaysia’s Growth Poised At 4.5% - 5.0%

According to the latest Economic Outlook released by SME Bank, Malaysia’s GDP growth is projected to range between 4.5% and 5.0% in 2025, signaling renewed optimism across the economy. This positive trajectory is backed by the government’s Madani Economy framework and strong momentum carried over from 2024, which saw a robust 5.1% year-on-year growth.

“Malaysia’s economic engine is fueled by resilient household spending, favourable labour market conditions, robust private investment, and a rebound in external trade,” said Datuk Dr. Mohammad Hardee Ibrahim, Acting Group President and CEO of SME Bank.

Sectors Driving Growth in 2025

• Services Sector:
  Expected to remain the main growth engine, boosted by both consumer and business-related sub-sectors.

• Construction:
  Continues to lead with double-digit growth, extending its strong performance from 2023 and 2024.

• Manufacturing:
  Poised for expansion, supported by strategic national policies such as the New Industrial Master Plan 2030, National Energy Transition Roadmap, and the National Semiconductor Strategy.

• Tourism:
  Anticipated to see significant growth, driven by Malaysia’s ASEAN Chairmanship in 2025 and preparations for Visit Malaysia Year 2026.

Under Budget 2025, initiatives such as higher cash handouts, increased civil servant salaries, and a revised minimum wage of RM1,700 are set to boost consumer confidence and economic participation.

SME Bank’s forecast aligns with the World Bank’s January 2025 projection, which anticipates global growth stabilising at 2.7% in both 2025 and 2026—supported by easing inflation, lower commodity prices, and broad-based monetary easing across both advanced and emerging markets.