Malaysian Economy 2025: Poised for Growth Amid Global Challenges – Insights from Dr. Mohd Afzanizam Abdul Rashid

KUALA LUMPUR 2 Jan  – The Malaysian economy has made significant strides in 2024, setting the stage for a promising 2025.

According to Dr. Mohd Afzanizam Abdul Rashid, Chief Economist and Social Finance Advisor at Bank Muamalat Malaysia Berhad (BMMB), the nation’s economic trajectory reflects resilience and the impact of sound policy-making.

2024: A Year of Recovery and Resilience

Dr. Afzanizam highlighted Malaysia’s commendable economic performance in 2024, noting key achievements:
 

•  The FBMKLCI index surged by 12.9%, recovering from three consecutive years of decline.

•  The Malaysian ringgit emerged as the best-performing currency in the emerging markets.

•  The economy grew at a rate of 5.2% over the past three quarters, meeting government growth targets of 4.8% to 5.3%.

These milestones underscore Malaysia’s ability to rebound despite global uncertainties, with robust domestic consumption and strategic policy interventions driving the recovery.

Subsidy Rationalisation: A Bold Step for 2025

Dr. Afzanizam emphasized the government’s planned subsidy rationalisation for RON95 as a pivotal reform in 2025. While the move is expected to be unpopular, its benefits are far-reaching:

•  It will generate substantial fiscal savings and promote a more targeted subsidy approach.

•  Successful implementation will enhance government credibility, boosting investor and public confidence.

“The resolve demonstrated by the government in implementing such a measure will result in greater confidence from the investing community and the general public,” Dr. Afzanizam noted.

Economic Growth Prospects for 2025

With a projected GDP growth of 5.0%, Malaysia is set to sustain its recovery, supported by:
 

•  Full employment in the labour market.

•  Expansionary fiscal policies and a supportive monetary stance, which will stimulate domestic growth.

However, external risks loom large. Dr. Afzanizam pointed to ongoing conflicts in the Middle East and Eastern Europe, uncertainties surrounding the incoming US President’s policies, and concerns over China’s slowing economy as potential challenges.

Transition to a Greener Economy and AI Integration

Dr. Afzanizam stressed the transformative impact of Malaysia’s shift toward a greener economy and the integration of Artificial Intelligence (AI).

These developments will shape national policies, influence business practices, and affect households.

Key announcements in the 13th Malaysian Plan will chart the nation’s economic course from 2026 to 2030, addressing these trends.

BNM’s Monetary Policy and Inflation Outlook

Bank Negara Malaysia (BNM) is likely to maintain the Overnight Policy Rate (OPR) at 3.00% in 2025, as the subsidy rationalisation for RON95 is expected to significantly affect inflation. Dr. Afzanizam noted that a stable OPR would also:
 

• Strengthen the ringgit toward the end of the year by narrowing the interest rate gap with the US.
•   Support domestic consumption while ensuring monetary stability.
• The US Federal Reserve’s monetary policy decisions will remain a critical factor to watch.

 

Towards High-Income Status

Dr. Afzanizam expressed optimism about Malaysia’s economic future, asserting that the nation is on track for sustainable and inclusive growth. Achieving high-income status by 2028, as envisioned by the World Bank, is within reach if:
 

•  Policies remain clear and consistent.

•  Implementation is effective across all levels of governance and society.

“It will require hard work from all parties,” he remarked, underscoring the importance of collective effort in driving Malaysia’s progress.

In Summary, Dr. Afzanizam’s insights paint a picture of an economy poised for growth, bolstered by prudent policies and resilient fundamentals.

However, navigating external uncertainties and embracing transformative trends will be key to sustaining progress.

As Malaysia embarks on its journey into 2025, the focus remains on achieving inclusivity, sustainability, and long-term prosperity. - DagangNews.com