Kuala lumpur: Malaysia's gross domestic product (GDP) growth for the fourth quarter of 2025 (4Q 2025) is projected to surpass the year-earlier level, indicating stronger underlying economic momentum and reduced downside risks heading into 2026, according to economists.
According to BERNAMA News Agency, Malaysia's GDP grew by 5.0 per cent in 4Q 2024, primarily driven by domestic demand. Mohd Sedek Jantan, director of investment strategy and country economist at IPPFA Sdn Bhd, stated that the official 4Q 2025 GDP growth is expected to align closely with the Department of Statistics Malaysia's (DOSM) advance estimate of 5.7 per cent, with minimal revision risk.
Mohd Sedek noted that compared to 4Q 2024, when growth was influenced by post-pandemic normalization and external volatility, the current expansion is more internally generated. Factors such as increased household spending, tight labor conditions, and moderated inflation have supported persistent growth rather than front-loaded expansion. This suggests that 4Q 2025 growth is likely to exceed the 5.0 per cent recorded a year earlier, signaling stronger momentum and lower downside risk as the global environment remains uneven.
He further mentioned that any adjustments to the headline figure would likely result from data completion and benchmarking rather than a reassessment of underlying economic conditions. The probability of a significant deviation from the advance estimate remains low due to strong domestic demand and services activity in 4Q 2025.
Malaysia's full-year GDP growth for 2025 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 and Markets Research highlighted strong economic growth in the third quarter of 2025, combined with stable tariff impacts and resilient domestic conditions, reinforcing expectations of a firmer economic performance in 2025. DOSM is scheduled to release the official GDP figures for 4Q 2025 on February 13, 2026.
Prof Emeritus Dr. Barjoyai Bardai of the Malaysia University of Science and Technology (MUST) agreed with Mohd Sedek, anticipating Malaysia's official 4Q 2025 GDP growth to be close to the advance estimate of 5.7 per cent, within a range of 5.5 to 5.8 per cent. He noted that firm activity indicators through November and December, particularly in manufacturing, domestic consumption, and services, limit the likelihood of a significant downward revision. There is a modest chance that the GDP figure could exceed expectations due to stronger-than-anticipated year-end consumer spending and services activity.
Barjoyai emphasized that 4Q 2025 growth is likely to exceed the 5.0 per cent recorded in the same quarter of 2024, supported by stronger domestic demand, improving external cycles, and favorable base effects. Unlike 4Q 2024, which was affected by uneven export recovery, growth in 4Q 2025 was more broad-based, with private consumption bolstered by firm labor market conditions, easing inflation, and targeted government income support.
He interpreted the stronger-than-expected 5.7 per cent advance estimate as a signal of underlying economic resilience, particularly as the economy heads into 2026. The late-2025 expansion was anchored by steady private consumption, services growth, stabilizing manufacturing, and continued public and private investment, rather than one-off or inventory-driven factors. Policy tightening has not derailed growth, as economic activity remained resilient despite tighter global financial conditions earlier in the year and a firm domestic policy stance. This suggests that Malaysia's neutral-to-slightly-restrictive policy mix has not stifled demand, reinforcing confidence in the economy's ability to tolerate policy normalization.
Additionally, Barjoyai noted that the strong 4Q 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.
Regarding Malaysia's full-year GDP growth for 2025, estimated at 4.9 per cent, Barjoyai highlighted that the outcome reflects a stronger-than-expected second half, capped by robust 4Q 2025 growth of 5.7 per cent that lifted the full-year average. The growth composition was policy-friendly, anchored by services, a rebound in manufacturing, sustained construction growth, and firm domestic demand, indicating an improvement in growth quality rather than just headline strength.