Malaysia’s economy accelerated to a three-year high in the fourth quarter of 2025, with Gross Domestic Product (GDP) expanding 6.3%, lifting full-year growth to 5.2%, according to the Ministry of Finance (MoF), outperforming the government’s earlier 4%–4.8% forecast range.
Prime Minister and Finance Minister Anwar Ibrahim said the stronger performance was driven by resilient domestic demand despite global volatility, while fiscal consolidation continued with the deficit narrowing to 3.7% of GDP in 2025 from 4.1% in 2024, beating the initial 3.8% projection.
Macroeconomic conditions also improved, with unemployment falling to 2.9%, the lowest in over a decade, and inflation easing to 1.4% from 1.8% a year earlier, reflecting stable price pressures and strengthening labor market conditions.
Anwar noted that savings from fiscal reforms were channelled into social aid programmes such as Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA), while investor confidence strengthened as the ringgit emerged as Asia’s best-performing currency and the FTSE Bursa Malaysia KLCI posted its strongest performance in seven years.
Looking ahead, the MoF projects steady growth in 2026 supported by firm household consumption, sustained investment, higher tourism arrivals under Visit Malaysia 2026, and wage increases, with Budget 2026 set to lay the foundation for the Thirteenth Malaysia Plan (2026–2030) while maintaining fiscal discipline.
