Malaysia's economy to outperform in 2025 driven by robust labour market - Mastercard

KUALA LUMPUR - Malaysia's economy is expected to outperform in 2025, with a projected gross domestic product (GDP) growth rate of 4.7 per cent, driven by a robust labour market and strengthening investment, according to the Mastercard Economics Institute (MEI) in its released economic outlook for 2025.

MEI said private consumption is expected to be the key driver as household purchasing power improves, supported by better-quality and higher paying employment, particularly within the higher skilled white collar services sub-sectors.

"As the disinflationary environment eases the burden on consumers, MEI forecasts the Asia Pacific (APAC) will see tight labour markets and a catch-up of inflation-adjusted wages, which is expected to contribute to increased spending — especially on discretionary items including big-ticket purchases such as electronics, furniture and appliances.

"While some of the pent-up demand for experience spending has subsided, consumers are still prioritising big-ticket moments, such as major concerts and events," the institute said in a statement today.

Mastercard's chief economist of Asia Pacific David Mann said that if 2024 was about “getting back to normal”, 2025 will be about normalisation as volatility subsides and easing monetary policies allow consumers to benefit from economic growth.

“However, policy decisions like potential interest rate rises in Japan or United States tariffs could significantly impact this growth. Businesses should leverage consumer optimism while preparing for potential trade disruptions," he said.

For 2024, MEI forecasts continued growth for APAC in line with 2024 levels, with lower inflation and easing interest rates expected to relieve consumers and households.

According to MEI, this aligns with broader economic trends as the global economy is projected to grow by 3.2 per cent in 2025, following an estimated 3.1 per cent pace in 2024. - BERNAMA