KUALA LUMPUR (Oct 24): Malaysia's economic outlook for 2025 appears optimistic, with a mix of opportunities and challenges ahead, according to the Malaysian Institute of Economic Research (MIER).

MIER noted that while the Budget 2025 outlook is positive, its success will depend on policy implementation, particularly in fiscal discipline, economic inclusivity, and the adoption of technological innovations to sustain growth.

The institute projected a steady gross domestic product growth rate of between 4.5% and 5.5%, which it views as an achievable target.

"Domestic demand, exports, investor confidence, and inflation are expected to align with the easing global inflation trend, while political stability will continue to set the growth driver tone," MIER said in its Budget 2025 overview report.

The think-tank also said that the Madani Economy framework, which focuses on structural reforms and restructuring, will also support economic growth, supported by the positive impact of government policies and advancements in sectors like technology and artificial intelligence which are poised to boost productivity.

However, it noted that Malaysia remains vulnerable to global economic uncertainties.

The report also highlighted that the country's fiscal position is strained by the continuous need for public spending on infrastructure and social programmes.

Additionally, challenges such as income inequality, lack of inclusivity, competitiveness issues, environmental sustainability, and the skills mismatch in the labour market continue to constrain the nation's growth potential, added MIER.

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