SME Bank Forecasts Malaysia’s 2025 GDP Growth at 4.5–5% Amid Positive Economic Outlook

Small Medium Enterprise Development Bank Malaysia Bhd (SME Bank) projects Malaysia’s economic growth to range between 4.5% and 5.0% in 2025, reflecting overall positive economic sentiment and aligning with the robust Madani Economy framework.

Datuk Dr Mohammad Hardee Ibrahim, Acting Group President and Chief Executive Officer of SME Bank, stated, “Malaysia’s Gross Domestic Product (GDP) grew by 5.1% year-on-year (YoY) in 2024, in line with our internal forecast of 4.3%–5.3%. This growth was driven by strong household spending, favourable labour market conditions, robust investment, and a recovery in external trade. Given this momentum, we expect Malaysia’s GDP to register between 4.5% and 5.0% in 2025.”

As part of its commitment to empowering the SME ecosystem, SME Bank continues to provide both financing and non-financial support to help businesses scale and grow. The bank remains a key partner in implementing government-mandated programmes under Budget 2025, particularly in strategic sectors such as Bumiputera development, technology, environmental, social and governance (ESG), halal, and tourism.

These sectors play a crucial role in driving regional economic catalysts and strengthening Malaysia’s overall economic resilience.

In line with its role as a leading development financial institution, SME Bank is pleased to release its 2025 Economic Outlook Report, offering key insights into Malaysia’s economic landscape and valuable guidance for SMEs navigating the year ahead.

Key Economic Highlights for 2025

• Services sector expansion – Growth driven by consumer and business-related subsectors.
• Resilient household spending – Supported by a strong labour market and government policies.
• Budget 2025 measures to boost spending – Increased cash assistance for lower-income households, salary adjustments for civil servants, and a rise in the minimum wage from RM1,500 to RM1,700.
• Tourism sector uplift – Malaysia’s ASEAN Chairmanship in 2025 to enhance tourism, leading up to Visit Malaysia Year 2026.
• Construction sector to lead growth – Expected to see the highest expansion, maintaining its strong momentum from 2023 and double-digit growth in 2024.
• Manufacturing sector outlook – Growth supported by key policies, including the New Industrial Master Plan 2030, the National Energy Transition Roadmap, and the National Semiconductor Strategy.

Chief Economist of SME Bank, Lynette Lee Li Qing, noted, “While we are optimistic about Malaysia’s growth prospects in 2025, external challenges such as slower GDP growth among key trading partners, geopolitical tensions, and global protectionist policies pose risks. However, domestic drivers remain strong, underpinning overall economic resilience.”

SME Bank’s 2025 growth forecast aligns with the World Bank’s latest projections, which anticipate global economic stability at 2.7% in both 2025 and 2026, supported by easing inflation and monetary policy adjustments. Key ASEAN economies, including Indonesia, the Philippines, and Vietnam, are expected to benefit from robust domestic demand, infrastructure investments, and expanding trade.

The full SME Bank Economic Outlook Report 2025 is available at: https://bit.ly/EO2025PR.