FMM PRESS STATEMENT : Malaysia – Steady Growth Ahead
Head Office, KL
Kuala Lumpur, January 8, 2025 – The global economy continues to show diverse recovery patterns, with advanced economies having largely returned to pre-pandemic activity levels, while developing economies still grapple with output shortages and persistent inflation. Global recovery remains ongoing, especially in developing countries, which are still adjusting to supply shocks. Inflation globally is expected to edge closer to central bank targets, leading to a shift from aggressive monetary tightening towards fiscal consolidation in many regions.
Global growth is projected at 3.2% in 2025, slightly lower than the 3.3% growth seen in 2023. The Federal Reserve is expected to gradually reduce interest rates, though the pace of cuts will be more moderate than in previous years. Despite this, risks to the global outlook remain, influenced by geopolitical tensions, trade dynamics and domestic policy shifts in key economies.
In the US, political uncertainty, particularly around domestic policies under former President Donald Trump, may have implications for the broader economic outlook. Trade policy remains a key concern, with potential tariffs on countries with trade surpluses, such as China, possibly affecting global trade dynamics. US growth is forecasted at 2.7% in 2025, a slight dip from 2.8% in 2024, as the economy continues to adjust to global trends and domestic policy changes.
China is focused on revitalising its economy following a real estate crisis and growing debt concerns. The government is implementing stimulus measures to support the property sector and mitigate the impact of US tariffs. China’s growth is projected at 4.9% in 2024, slowing slightly to 4.5% in 2025. While the economy remains resilient, challenges persist, including the need for structural reforms and addressing domestic financial risks.
For Malaysia, the economic outlook for 2024 is optimistic, with GDP growth expected to remain strong, reaching around 5.0% for the year. Strong domestic demand, robust investment activities and growth in exports and tourism will be key drivers. In Q2 and Q3 of 2024, GDP grew at 5.9% and 5.3%, respectively. Exports are anticipated to continue performing well into 2025, with key sectors like electrical and electronics (E&E), semiconductors, palm oil, machinery and chemicals driving this expansion. The impact of potential US tariffs on Malaysia’s exports is expected to be limited based on historical data.
Inflation in Malaysia is expected to remain well-contained in 2024 at around 2.0%. However, inflation is forecasted to rise to approximately 3.0% in 2025, influenced by domestic factors such as an increase in the minimum wage, changes in the Employees Provident Fund (EPF) contributions for foreign workers, the extension of the Sales and Service Tax (SST) and subsidy rationalisation efforts. Nevertheless, inflation is expected to remain within the Ministry of Finance’s target range of 2.0-3.5%.
The Ringgit is expected to remain firm in 2025, supported by strong domestic demand and an improved tourism sector. Factors such as US Federal Reserve rate cuts, labour supply changes and inflation will influence the currency’s strength.
Malaysia’s GDP growth for 2025 is forecast to be between 4.5% and 5.0%. However, risks remain, including slower recovery in China, potential shifts in US policy, global commodity price fluctuations and domestic inflation pressures.
In conclusion, while global growth continues to evolve, Malaysia’s economy is poised for steady growth, supported by key domestic and external factors. With cautious optimism, we anticipate continued resilience through 2025, despite the challenges that may arise from global uncertainties.
Full Report of FMM - Malaysia Economy Outlook
Tan Sri Dato’ Soh Thian Lai President,
Federation of Malaysian Manufacturers
FMM Advocates Transparency, Integrity, Accountability and No Corruption
Global growth is projected at 3.2% in 2025, slightly lower than the 3.3% growth seen in 2023. The Federal Reserve is expected to gradually reduce interest rates, though the pace of cuts will be more moderate than in previous years. Despite this, risks to the global outlook remain, influenced by geopolitical tensions, trade dynamics and domestic policy shifts in key economies.
In the US, political uncertainty, particularly around domestic policies under former President Donald Trump, may have implications for the broader economic outlook. Trade policy remains a key concern, with potential tariffs on countries with trade surpluses, such as China, possibly affecting global trade dynamics. US growth is forecasted at 2.7% in 2025, a slight dip from 2.8% in 2024, as the economy continues to adjust to global trends and domestic policy changes.
China is focused on revitalising its economy following a real estate crisis and growing debt concerns. The government is implementing stimulus measures to support the property sector and mitigate the impact of US tariffs. China’s growth is projected at 4.9% in 2024, slowing slightly to 4.5% in 2025. While the economy remains resilient, challenges persist, including the need for structural reforms and addressing domestic financial risks.
For Malaysia, the economic outlook for 2024 is optimistic, with GDP growth expected to remain strong, reaching around 5.0% for the year. Strong domestic demand, robust investment activities and growth in exports and tourism will be key drivers. In Q2 and Q3 of 2024, GDP grew at 5.9% and 5.3%, respectively. Exports are anticipated to continue performing well into 2025, with key sectors like electrical and electronics (E&E), semiconductors, palm oil, machinery and chemicals driving this expansion. The impact of potential US tariffs on Malaysia’s exports is expected to be limited based on historical data.
Inflation in Malaysia is expected to remain well-contained in 2024 at around 2.0%. However, inflation is forecasted to rise to approximately 3.0% in 2025, influenced by domestic factors such as an increase in the minimum wage, changes in the Employees Provident Fund (EPF) contributions for foreign workers, the extension of the Sales and Service Tax (SST) and subsidy rationalisation efforts. Nevertheless, inflation is expected to remain within the Ministry of Finance’s target range of 2.0-3.5%.
The Ringgit is expected to remain firm in 2025, supported by strong domestic demand and an improved tourism sector. Factors such as US Federal Reserve rate cuts, labour supply changes and inflation will influence the currency’s strength.
Malaysia’s GDP growth for 2025 is forecast to be between 4.5% and 5.0%. However, risks remain, including slower recovery in China, potential shifts in US policy, global commodity price fluctuations and domestic inflation pressures.
In conclusion, while global growth continues to evolve, Malaysia’s economy is poised for steady growth, supported by key domestic and external factors. With cautious optimism, we anticipate continued resilience through 2025, despite the challenges that may arise from global uncertainties.
Full Report of FMM - Malaysia Economy Outlook
Tan Sri Dato’ Soh Thian Lai President,
Federation of Malaysian Manufacturers
FMM Advocates Transparency, Integrity, Accountability and No Corruption
About FMM
The Federation of Malaysian Manufacturers (FMM) has been the voice of the Malaysian manufacturing sector since 1968. Representing over 12,700 member companies (4,000 direct and8,700 indirect) from the manufacturing supply chain, FMM is actively engaged with government and its key agencies at Federal, State and local levels. FMM is also well-linked with international organisations, Malaysian businesses and civil society. Apart from benefitting from FMM’s advocacy, FMM members enjoy value-add services, including training, business networking and trade opportunities as well as regular information updates.
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