MALAYSIA’S economy expanded by 5.2% in 2025, supported by robust domestic demand, Bank Negara Malaysia (BNM) revealed based on its Annual Report 2025, Economic and Monetary Review 2025, and Financial Stability Review for the second half of 2025 released today.
The central bank cited that household spending remained firm, bolstered by positive labour market conditions and targeted policy measures, while investment surged, particularly in multi-year projects, high-technology services, and advanced manufacturing sectors.
The reports underscored the country’s resilient economic performance, stable financial system, and preparedness to navigate ongoing global uncertainties.
According to the reports, inflation averaged 1.4%, the lowest in five years, although the cost of living remains a concern.
BNM projects economic growth of between 4% and 5% for 2026, with resilient domestic demand, moderate inflation, a sound financial sector, and a stable external position providing a strong buffer against global shocks, including the evolving Middle East conflict.
Household consumption is expected to remain a growth anchor, underpinned by positive income prospects, a stable labour market, and continued policy support, while investment activity will expand at a more moderate pace.
The electronics and electrical sector is set to benefit from sustained semiconductor demand for AI developments and ongoing data centre projects, while inbound tourism, in conjunction with Visit Malaysia Year 2026, will support external sector performance. Headline inflation is expected to remain well anchored between 1.5% and 2.5%.
The central bank also emphasised the resilience of Malaysia’s financial system, with well-capitalised institutions, sound asset quality, ample liquidity, and secure payment and settlement systems.
Financing for small and medium enterprises grew 5.9% in 2025, with approvals and disbursements stable across sectors, demonstrating continued access to credit.
Reforms to strengthen consumer protection include the enactment of the Consumer Credit Act, revisions to the Hire-Purchase Act, the launch of the National Financial Literacy Strategy 2026–2030, and RESET initiatives in collaboration with the Ministry of Health and the Ministry of Finance.
BNM also highlighted progress in expanding access to banking services, promoting Islamic finance for socio-economic impact, and combating financial fraud.
Regionally, Malaysia’s leadership of ASEAN in 2025 strengthened integration, supported economic activity, and enhanced regional stability.
The country was reaffirmed under the Financial Action Task Force’s highest category, Regular Monitoring, reflecting its robust and improving anti-money laundering and counter-terrorism financing framework.
BNM’s audited financial statements for 2025 show total assets of RM602.22 billion and a net profit after tax of RM12.45 billion, of which RM7.45 billion has been allocated to the BNM Risk Reserves, and a dividend of RM5 billion has been declared to the government.
Governor Datuk Seri Abdul Rasheed Ghaffour said, “The Malaysian economy is resilient, recording growth of 5.2% in 2025 despite an extremely challenging external environment.
“Stable domestic economic, monetary and financial conditions have helped cushion the impact of external shocks and paved the way for important reforms to take place.
“We must continue to strengthen our economic fundamentals and policy buffers to better position Malaysia to navigate prevailing and future headwinds.
“While the environment continues to evolve, BNM’s commitment is firmly anchored to faithfully discharge our mandate to build a brighter future for all Malaysians.”
The results position Malaysia as a robust and forward-looking economy, with prudent financial management and resilient growth drivers, well-equipped to weather global uncertainties while supporting sustainable economic development. - March 31, 2026
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