Strong domestic demand drove Malaysia’s 2025 growth to 5.2%, beating forecasts and narrowing the fiscal deficit to 3.7%, with low unemployment and inflation.

KUALA LUMPUR: Strong domestic demand propelled Malaysia’s economy to outperform expectations in 2025.

The Ministry of Finance announced that fourth-quarter GDP hit a three-year high of 6.3%, lifting full-year growth to 5.2%.

This result surpassed the government’s official forecast range of 4% to 4.8% and exceeded the 5.1% growth achieved in 2024.

“For the second year running, the MADANI Government narrowed the fiscal deficit beyond its target, to 3.7%,” the ministry stated.

The initial projection for the deficit was 3.8%, an improvement from 4.1% in 2024.

Prime Minister Datuk Seri Anwar Ibrahim noted the strength in macroeconomic indicators is benefiting the public.

He highlighted an unemployment rate of 2.9%, the lowest in over a decade, and lower inflation of 1.4% in 2025 compared to 1.8% in 2024.

Anwar, who is also Finance Minister, said savings from fiscal reforms were redirected to social assistance like Sumbangan Tunai Rahmah.

The government remains committed to public infrastructure projects that improve quality of life.

“After three years of the MADANI Administration, it is increasingly clear that the articulation of a coherent policy framework has strengthened investor confidence,” he said.

This confidence is reflected in the ringgit’s performance as Asia’s best-performing currency.

Rising direct investments and the KLCI’s strongest performance in seven years also signal robust investor sentiment.

Bank Negara Malaysia attributed the better-than-expected performance to favourable exports as well.

The Prime Minister cautioned against complacency due to global headwinds and trade tensions.

“It is imperative that we stay the course on Ekonomi MADANI reforms,” Anwar stated.

He emphasised making 2026 a year to promote higher value-added activities and eradicate corruption.

The Ministry of Finance expects the economy to remain on a steady trajectory in 2026.

This will be supported by resilient domestic demand and continued investment momentum.

Higher tourism activity under Visit Malaysia 2026 and increases in wages will reinforce consumer spending.

Budget 2026 will lay the foundation for the 13th Malaysia Plan to promote inclusive expansion.

“The MADANI Government will continue to uphold fiscal discipline to safeguard long-term sustainability,” the ministry added.

 The Sun Malaysia