KUALA LUMPUR: Malaysia's economy is expected to grow at a healthy rate of 4.6 per cent in 2025, according to MIDF Research.
This will be underpinned by strong domestic consumption and resilient external trade, despite challenges such as geopolitical tensions and tighter trade rules.
MIDF Research said robust domestic fundamentals, including rising consumer spending, wage increases and a flourishing tourism sector, coupled with government initiatives such as salary hikes for civil servants and cash assistance programmes, are set to drive economic expansion next year.
"Growth fundamentals on the domestic front remain strong, supported by growing spending by both consumers and businesses," MIDF Research added.
The global economy is forecasted to expand by 3.2 per cent in 2025, according to the International Monetary Fund, matching this year's growth rate but remaining below pre-pandemic levels.
Meanwhile, the US presidential elections have introduced a degree of uncertainty to global markets but MIDF Research expects this uncertainty to wane in 2025, contributing to a more stable economic climate.
"While 2024 was marked by extraordinary volatility, the global economy is expected to stabilise in 2025, with reduced uncertainty surrounding the US presidential elections," MIDF Research head Imran Yasin said.
On the currency front, the firm expects the ringgit to strengthen, averaging RM4.23 against the US dollar in 2025, an improvement from this year's estimated RM4.56.
MIDF Research also expects Bank Negara Malaysia's overnight policy rate to remain at 3.00 per cent in 2025, maintaining an accommodative stance to support economic growth.
Overall, while challenges such as geopolitical tensions and tighter trade rules persist, Malaysia's resilient economic fundamentals and proactive policies are expected to sustain its growth trajectory, the firm said.
"As we step into 2025, we anticipate a year of growth driven by key domestic factors and the global recovery," Imran said.