It noted that the country has recorded strong performance in its services and construction sectors, fuelled by mega infrastructure projects and a recovery in tourism. “Accounting for the largest share of GDP, services remained decent, growing above 5% last year. This is thanks to the ongoing recovery in the labour market and still-decent subsidy support,” HSBC added.

UOB Global Economics & Markets Research highlighted several key growth drivers for 2025, including the expansionary national budget, stable labour market conditions, ongoing investments, increased tourism activity as Malaysia assumes the Asean chairmanship this year, energy transition efforts, implementation of national masterplans, and regional development.

“The signing of [the] Johor-Singapore Special Economic Zone (JS-SEZ) Agreement early this month is seen as another key growth driver. It is widely expected to boost trade and investments particularly in the 11 prioritized economic sectors within JS-SEZ,” UOB added, although it projected a slightly moderated 2025 GDP growth of 4.7%.

OCBC Global Markets Research was cautiously optimistic and forecasted a 2025 GDP growth of 4.5% for Malaysia. "The strength in household and investment spending will likely sustain in 2025 while E&E export growth will remain strong, but moderate from growth rates seen in 2024," OCBC said.

OCBC also expects underlying inflationary pressures to remain in check, and does not expect Bank Negara Malaysia to tweak the policy rate in 2025. BNM has kept the overnight policy rate at 3% since May 2023.

ANZ Research, which noted signs of a slowdown in private consumption and external demand, as indicated by retail sales and trade data from late 2024, said growth outlook for 2025 "is less favourable amid slower global growth and uncertainty around trade restrictive policies in the US". It is also not expecting BNM to adjust the OPR as inflation is expected to be stable.

For RHB Investment Bank (RHB IB), Malaysia's GDP growth for 2025 is expected to be bolstered by ongoing multi-year infrastructure projects, rising household incomes and easing global monetary conditions.

However, it also flagged potentially weaker consumer spending due to lower disposable income from the subsidy targeting, and slower-than-expected trade performance in 2025 amid US protectionist policies that may curtail global trade and manufacturing.

“In our base case, we assume gradual US tariff increases on China, reaching a maximum of 30%, with Malaysia potentially benefiting from China’s attempt to re-route its manufacturing and export operations given our major role as E&E exporters,” RHB IB said.