KUALA LUMPUR, Feb 9 — Malaysia’s gross domestic product (GDP) growth for the fourth quarter of 2025 (Q4 2025) is expected to exceed the year-earlier level, signalling stronger underlying momentum and lower downside risks heading into 2026, according to economists.
Malaysia’s GDP grew by 5.0 per cent in Q4 2024, driven mainly by domestic demand.
IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said the official Q4 2025 GDP growth outcome is expected to be broadly in line with the Department of Statistics Malaysia’s (DOSM) advance estimate of 5.7 per cent, with only limited revision risk.
Mohd Sedek said compared with Q4 2024, when growth was still influenced by post-pandemic normalisation and external volatility, the current expansion is more internally generated.
“Households are spending with greater confidence, labour conditions have remained tight, and inflation has moderated enough to preserve real purchasing power, supporting growth that is more persistent rather than front-loaded.
“In practical terms, this makes it more likely that Q4 2025 growth will exceed the 5.0 per cent recorded a year earlier. More importantly, it suggests the economy is entering 2026 with stronger underlying momentum and lower downside risk, even as the global environment remains uneven,” he told Bernama.
He said any adjustment to the headline figure would likely reflect data completion and benchmarking effects rather than a reassessment of underlying economic conditions.
“Given the strength of domestic demand and services activity in Q4 2025, the probability of a material deviation from the advance estimate remains low,” he said.
As for Malaysia’s full-year GDP growth for 2025, it is estimated at 4.9 per cent based on advance estimates and market consensus, slightly lower than the 5.1 per cent recorded in 2024 but above the government’s and Bank Negara Malaysia’s (BNM) earlier forecast range of 4.0 to 4.8 per cent.
Research firms such as RHB Research, MBSB Research and CIMB Treasury & Markets Research said strong economic growth in the third quarter of 2025, combined with more benign tariff impacts and resilient domestic conditions, reinforces expectations of a firmer economic performance in 2025.
DOSM is scheduled to release the official GDP figures for Q4 2025 on February 13, 2026.
Prof Emeritus Dr Barjoyai Bardai of the Malaysia University of Science and Technology (MUST) concurred with Mohd Sedek, saying that he expects Malaysia’s official Q4 2025 GDP growth to come in close to the advance estimate of 5.7 per cent, possibly within a narrow range of 5.5 to 5.8 per cent.
“Given that Q4 2025 activity indicators remained firm through November and December, particularly in manufacturing, domestic consumption and services, there is limited reason to expect a material downward revision,” he said.
He added that there is a modest chance that the official GDP figure could come in slightly higher than expected because year-end consumer spending and services activity were stronger than anticipated.
“(This is) especially if end-year private consumption and services output, including tourism as well as wholesale and retail trade, surprised positively, which appears plausible given strong holiday spending and improved labour market conditions,” he said.
According to Barjoyai, Q4 2025 growth is very likely to exceed the 5.0 per cent recorded in the same quarter of 2024 by a meaningful margin, supported by stronger domestic demand, an improving external cycle and favourable base effects.
He said unlike Q4 2024, which was still affected by uneven export recovery, growth in Q4 2025 was more broad-based, with private consumption supported by firmer labour market conditions, easing inflation and targeted government income support.
Interpreting the stronger-than-expected 5.7 per cent advance estimate, Barjoyai said it signals underlying economic resilience, particularly as the economy heads into 2026.
“What stands out is not just the headline number but the composition of growth, with late-2025 expansion anchored by steady private consumption, services growth, stabilising manufacturing, and continued public and private investment, rather than one-off or inventory-driven factors,” he said.
He added that policy tightening has not derailed growth, as economic activity remained resilient despite tighter global financial conditions earlier in the year and a relatively firm domestic policy stance.
“This suggests that Malaysia’s neutral to slightly restrictive policy mix has not choked off demand, reinforcing confidence that the economy can tolerate policy normalisation,” said Barjoyai.
Additionally, he said, the strong Q4 2025 performance reduces the urgency for monetary easing, with BNM likely to maintain a cautious, data-dependent stance in early 2026 while monitoring inflation risks.
“Unless there is a sharp global slowdown, any rate cuts are more likely in the second half of 2026 rather than in the near term,” he said.
Touching on Malaysia’s full-year GDP growth for 2025, which is estimated at 4.9 per cent, Barjoyai said the outcome reflects a stronger-than-expected second half, capped by robust Q4 2025 growth of 5.7 per cent that lifted the full-year average.
“The composition of growth was also policy-friendly, anchored by services, a rebound in manufacturing, sustained double-digit construction growth and firmer domestic demand despite fiscal and monetary normalisation, indicating improving growth quality rather than headline strength alone,” he said. — Bernama
