Malaysia is projected to be the ASEAN’s second-fastest growing economy next year, trailing after Vietnam, according to a revised estimate by HSBC Global Investment Research.
Image credit: Canva
Key revised figures include:
- 2025 GDP growth forecast: increased to 5%
- Reflects improving trade conditions among regional economies
- Supported by stronger domestic resilience
“Malaysia’s neutral diplomatic stance at the recent ASEAN Summit helped maintain confidence among major trading partners, contributing to a more stable outlook alongside improving global demand,” HSBC Research stated.
Image credit: Bernama
Higher growth driven by broad recovery across sectors
Malaysia’s third quarter GDP expanded by 2.4% quarter-on-quarter, marking the fastest acceleration in three years. While some activity may have been advanced ahead of external uncertainties. HSBC believes the growth is supported by broader economic fundamentals, mirroring patterns seen in Vietnam and Singapore.
Revised medium-term projections include:
- 2026 GDP forecast raised from 4% to 4.5%
A reciprocal trade pact with the United States has further eased concerns over external volatility. Meanwhile, the tourism sector has fully rebounded to 2019 levels, with Malaysia now one of the region’s top performers.
Image credit: Visit Malaysia 26
Arrivals from China have surpassed 20% of pre-pandemic figures, supported by visa exemptions and improved flight connectivity. The upcoming “Visit Malaysia 2026” campaign is expected to provide an additional lift.
Policy rate likely to stay unchanged
HSBC Research expects Bank Negara Malaysia to maintain its current monetary stance given stable inflation and strengthening data trends
Image credit: Bernama
Key monetary indicators:
- Overnight Policy Rate (OPR): expected to remain at 2.75%
- No near-term adjustments anticipated as economic conditions stabilize
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