KUALA LUMPUR: Malaysia's economic outlook for 2025 remains optimistic, though it brings a mix of opportunities and challenges, according to Dr. Anthony Dass, executive director of the Malaysian Institute of Economic Research (MIER).
He noted that the 2025 Budget holds promise, with its success depending on the effective implementation of policies centered on fiscal discipline, economic inclusivity, and the adoption of technological innovations to drive sustained growth.
Dr. Dass also affirmed that the government's 2025 GDP growth projection of 4.5 to 5.5 percent is a realistic and achievable target.
He stated that domestic demand, exports, investor confidence, inflation expected to align with the easing global inflation trend, and political stability will continue to set the growth driver tone.
"Growth would also be supported by the ongoing Madani framework on structural reforms and restructuring, as well as the positive impact from government policies like the National Energy Transition Roadmap (NETR), New Industrial Master Plan (NIMP) 2030, and 12th Malaysian Plan (12MP), advancements in sectors like technology and artificial intelligence, which are poised to boost productivity," he added.
Dass, however, said that challenges remain as the country is vulnerable to the global economic uncertainty.
He noted that the fiscal position is strained by the need for continuous public spending on infrastructure and social programs.
"Income inequality and inclusivity, competitiveness, environment sustainability, and the issue of skills mismatch in the labour market, among others, puts a lid on our growth progress," he said.
According to Dass, small and medium enterprises (SMEs) will continue to be central to the country's economic strategy, with a focus on innovation, sustainability, and global market integration.
Given that SMEs contribution to the GDP is around 38 per cent and employ nearly 50 per cent of the workforce, he said several factors are expected to shape their development.
This includes digital transformation to accelerate their adoption of digital tools and better access to financing by expanding the digital banking and fintech innovations.
"The government support and policies have laid out specific policies and programs to foster SME growth, such as tax incentives, grants, and capacity-building initiatives.
"Budget allocations and beyond are expected to focus on empowering SMEs through skills training, digitalisation, and providing easier access to financing," he added.