Malaysia Targets 5.5% Growth by 2025, Driven by Wage Hikes

Malaysia's economy is forecasted to grow by approximately 4.5% to 5.5% in 2025, surpassing the 4.6% expansion estimated by analysts. Increased salaries for government employees and intentions to raise the lowest pay in the private industry are expected to drive up domestic consumption in 2025.

However, the country that depends on trade for their economy is still at risk to worldwide market instability. Malaysia's exports decreased in September due to a decline in outbound shipments to China, impacting by China's uneven recovery.

In the third quarter of 2024, Malaysia's economy grew more quickly than anticipated due to improvements in the services and manufacturing industries, aligning with the government's updated annual growth prediction.

According to initial estimates from Malaysia's Department of Statistics on Oct 21, the economy expanded by 5.3 per cent in the July-September period compared to the previous year. This exceeds the 5.1 per cent median forecast in a Bloomberg poll.

The increase in growth figures occurred shortly after Prime Minister Anwar Ibrahim raised Malaysia's 2024 growth forecast range to 4.8 per cent to 5.3 per cent, anticipating a more robust recovery. This measure is aimed at assisting the government in reaching its goal of a fiscal deficit of 4.3 per cent of GDP, even as it works towards reducing petrol subsidies starting in 2025.