Economic growth rises in the fourth quarter of 2025

Economy ends 2025 on a high note: Malaysia's GDP grew 5.7% in annual terms in Q4, following a 5.2% expansion in the prior quarter. Q4's reading was the strongest since Q2 2024 and beat market expectations of a softer uptick compared with Q3. In 2025 as a whole, the economy grew 4.9%, down from 2024’s 5.1% rise but surpassing the Central Bank’s projections of 4.0–4.8% growth.

Agriculture, manufacturing and services fuel acceleration: Compared with the previous quarter's data, readings in Q4 improved for the agricultural sector (+5.1% in annual terms vs +0.4% in Q3), the construction sector (+11.9% vs +11.8% in Q3), the manufacturing sector (+6.0% vs +4.1% in Q3) and the services sector (+5.4% vs +5.0% in Q3). In contrast, the reading for mining softened in Q4 (+1.1% vs +9.7% in Q3). In Q4, agriculture got a boost from a rebound in palm oil production, manufacturing from electronics, services from trade-related activities, and construction from infrastructure and data-center projects.

Panelist insight: Nomura’s Euben Paracuelles and Yiru Chen commented on the outlook: “We continue to expect robust domestic demand to be the main growth engine [in 2026], led by both investment spending and private consumption. Strong investment spending growth will likely be sustained by the government’s implementation of infrastructure projects and structural reform. […] We think private consumption will remain supported by resilient labour market conditions and fiscal measures, including a MYR100 handout on 9 February. Additionally, we expect export growth to benefit from a sustained global tech uptrend (with a 6-8 month lead to exports), which could also generate positive spillovers on domestic demand, via labour market and rising wage growth.”

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