KUALA LUMPUR: Malaysia's economy is forecasted to expand by 4.5 to 5.5 per cent in 2025, according to Economic Outlook 2025.
Growth will be supported by a resilient external sector, benefitting from improved global trade and stronger demand for electrical and electronic goods, leveraging the country's strategic position within the semiconductor supply chain.
The report added that robust domestic demand, fuelled by strong private sector expenditure, is poised to support the expansion through continued implementation of key national master plans and ongoing initiatives.
On the supply side, the services sector remains the primary growth driver, supported by tourism activities, steady exports and a boost in information and communication technology (ICT) activities.
"The tourism-related industries, particularly food and beverages (F&B), accommodation and retail trade segments, are expected to increase further. The wholesale trade as well as air and water transportations segments will benefit from sustained trade-related activities," it said.
The report said industries such as the utilities and professional services are expected to rise in tandem with the acceleration of ICT development, particularly in data centres.
The manufacturing sector is projected to expand further attributed to better performance in export-oriented industries, primarily the electrical and electronics (E&E) segment, as external demand for semiconductors continues to increase.
Additionally, the domestic-oriented industries are anticipated to remain favourable in line with higher domestic consumption and investment, and the construction sector is expected to rise due to growth in all subsectors.
The report added that on the income side, the compensation of employees is expected to grow supported by the implementation of the new minimum wage rate and upward salary revision for civil servants.
"This is also backed by sustained economic growth which will provide better employment opportunities for the rakyat. However, as an open economy, Malaysia remains susceptible to global vulnerabilities which may pose risks to the nation's economic growth."
"These include the escalation of geopolitical tensions, supply chain disruptions, volatility in financial market conditions and varying growth prospects across economies."
"Therefore, the government remains resolute in ensuring the continuous implementation of pragmatic measures and initiatives to further strengthen the economy," it said.