Malaysia’s growth set to surpass 5% this year, minister says
State-owned funds have also boosted investments in the economy
MALAYSIA’S growth is set to sustain last year’s pace and exceed 5 per cent in 2025, as strong foreign direct investments and support from local funds shield the economy from any global risks, Second Finance Minister Amir Hamzah Azizan said.
The country is already on a positive track, with the government likely beating last year’s deficit target of 4.3 per cent of gross domestic product, Amir said. The government plans to narrow the gap further to 3.8 per cent of GDP this year.
“We have a good base because foreign direct investments remain strong and a lot of activity that’s generated is now playing out through the economy,” Amir said in the administrative capital of Putrajaya late Wednesday (Jan 8). “We are confident that we will have a good year.”
Restoring fiscal health is key for Malaysia to retain emerging South-east Asia’s highest credit score as Prime Minister Anwar Ibrahim’s government restores political stability and drives the nation’s economic resurgence. Officials previously said they expect GDP to grow by about 4.5 to 5.5 per cent this year, largely exceeding the 4.7 per cent expansion predicted by analysts surveyed by Bloomberg.
Malaysian government-linked investment companies (GLICs), which manage almost RM2 trillion (S$608 billion) in assets combined, have also boosted their direct investments in the economy, Amir said. That’s helping to fuel growth, he added.
“Traditionally GLICs will invest, plus or minus, nearly half a trillion ringgit over a five-year period,” he said. “They are boosting it up by another 120 billion over a five-year period. So that’s a fairly significant step up.”
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Higher salaries for civil servants, as well as plans to increase the minimum wage in the private sector, are also poised to boost domestic demand.
The strength of the Malaysian economy and foreign direct investments will continue to support the ringgit, Amir said.
“Imports are measured, exports are growing still, and supportive mechanisms allow us better tools to use to cushion blows,” he said.
The Malaysian currency was the best performer across emerging markets in 2024. It strengthened 2.7 per cent against the US dollar, ending three consecutive years of declines.
Amir said he is confident that the nation’s diversified economy will withstand the threat of Donald Trump’s tariffs and trade wars that has rattled developing-nation assets.
“Despite the choppiness in the global market, where we are today, I think we have got enough resilience to ride it through,” Amir said. BLOOMBERG
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