KUALA LUMPUR (Feb 13): Malaysia’s economy grew 6.3% in the fourth quarter of 2025 (4Q2025), beating full-year estimates thanks to strong domestic demand.

The Department of Statistics Malaysia had put advance estimates for the quarter at 5.7%.

Full-year growth hit 5.2%, above the 4%-4.8% forecast. This marks the highest growth since 2022, when the economy grew 9%.

Bank Negara Malaysia (BNM) in a statement said household spending rose on the back of a healthy job market and income support measures in 4Q2025. Investment increased, particularly in machinery and equipment such as data centres, alongside ongoing public and private projects. Exports were boosted by electrical and electronics (E&E) goods, while tourism and information and communications technology (ICT) services supported the current account surplus. While, imports remained firm due to demand for intermediate and capital goods.

On the supply side, growth was led by services and manufacturing. Services expanded due to stronger consumer activities, government services and ICT, while manufacturing was supported by higher E&E and consumer goods production. Agriculture also improved, helped by better palm oil output as floods were less severe.

In 4Q2025, headline inflation stayed at 1.3% and core inflation rose to 2.3%, driven by higher prices for items like jewellery and watches. Lower electricity and petrol prices, aided by subsidies, helped offset some of the increase. Overall, for 2025, headline inflation averaged 1.4% and core inflation 2%, both lower than in 2024.

Credit growth to Malaysia’s private non-financial sector slowed to 5.4% in 4Q2025 due to slower expansion in loans and corporate bonds.

Business loan growth eased to 3.9%, mainly from slower small and medium working capital loans, though investment-related loans stayed above the long-term average.

Quarterly loan disbursements rose to RM393.5 billion. Household loan growth remained steady at 5.6% across most purposes.

BNM governor Datuk Seri Abdul Rasheed Ghaffour said growth was driven by strong domestic demand and steady exports in 2025, and is expected to continue in 2026.

Household spending and investment are expected to remain supportive, while exports and tourism — including Visit Malaysia Year 2026 — will provide additional growth. Inflation is forecast to remain moderate in 2026, with recent policy reforms expected to have only a modest impact on prices. 

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