Kuala lumpur: Strong crude palm oil production and manufacturing performance likely propelled the country's fourth quarter (4Q 2025) gross domestic product (GDP) growth to 5.3 percent year-on-year (y-o-y), implying a full-year growth of 4.8 percent, said CIMB Investment Bank Bhd. The bank said bumper palm oil production likely boosted growth by 0.4 percentage points.
According to BERNAMA News Agency, monthly data indicated that crude palm oil production accelerated in 4Q 2025, rising from 13.7 percent y-o-y in October to 23.1 percent y-o-y in December, due to higher fresh fruit bunch yields as well as a slightly lower base in 4Q 2024 compared to previous years. The bank noted that the bumper palm oil harvest posed an upside surprise to their growth forecast as it was uncharacteristic of the annual seasonal pattern, which typically sees production decreasing to lower levels in the last two months of the year. Looking ahead into 2026, crude palm oil production is likely to fall lower in the first quarter in line with the seasonal trend, with some slight payback expected in 4Q 2026.
Similarly, CIMB IB has forecast that the manufacturing sector's growth increased by 5.8 percent y-o-y in 4Q 2025 (3Q 2025: 4.1 percent), reflecting strong monthly industrial production data. The bank reported that industrial production expanded by 6.0 percent y-o-y in October 2025 before moderating to 4.3 percent y-o-y in November, as manufacturing and mining output growth slowed. The manufacturing industrial production index in 4Q 2025 was lifted by growth in export-oriented industries, while domestic-oriented industries' output growth remained stable.
Among export-oriented industries, growth was led by computer, electronics, and optical products, followed by electrical equipment, in line with the electrical and electronics (E and E)-led export growth narrative. Nonetheless, CIMB IB continues to expect some slowdown in export-oriented industries, particularly among non-E and E manufacturers, as higher US tariffs and a stronger ringgit dampen demand in 2026.