KUALA LUMPUR, Jan 16 (Reuters) - Malaysia's economy likely expanded 4.9% in 2025, beating the government and central bank's projections, as growth in the final quarter of the year surged on strong performances
in key sectors and robust domestic demand.
Gross domestic product grew 5.7% in the October-to-December period from a year earlier, official advance estimates showed on Friday, faster than the 5.2% expansion in the third quarter. It was the quickest since the second quarter of 2024 when the economy grew 5.9%.
The economy had been expected to expand between 4% and 4.8% last year, slowing from the 5.1% growth recorded in 2024.
Growth in the last three months of 2025 was driven by strength in the main economic sectors including services, manufacturing and construction, the statistics department said in a statement.
"Economic growth in the fourth quarter of 2025 was also supported by the continued strengthening of domestic demand," Chief Statistician Mohd Uzir Mahidin said.
Malaysia's export growth also remained robust in the quarter, despite trade disruption from the impact of U.S. tariffs. Exports rose 15.7% on-year in October, before moderating to 7% in November, the department said.
GLOBAL TRADE UNCERTAINTY TO WEIGH ON ECONOMY
The United States has imposed a 19% tariff on most imports from Malaysia. Lingering uncertainties around global trade and tariffs are expected to continue to weigh on the economy, with Malaysia's government projecting growth of between 4% and 4.5% for 2026.
Final fourth-quarter and 2025 GDP figures are expected to be released on February 13.
Analysts expected economic growth to remain firm in the coming months, with Bank Negara Malaysia unlikely to ease monetary policy during the year.
The central bank at its last policy review in November held its benchmark interest rate at 2.75%, after cutting rates for the first time in five years in July as a preemptive measure to head off external uncertainties.
"Overall, with the economy set to remain solid we think there is little urgency for the central bank to loosen monetary policy in the coming quarters," Capital Economics Asia Economist Shivaan Tandon said in a note.
Barclays' economist Brian Tan said he expected BNM to turn more hawkish, with a 25-basis-point rate hike to 3.00% potentially seen in May.
"The increasing evidence that the economy is not only proving resilient but even outperforming is likely to raise questions over whether the preemptive July rate cut last year to head off a tariff-induced economic downturn was necessary," he said.
(Reporting by Rozanna Latiff; Editing by David Stanway, Martin Petty)
