MALAYSIA outperformed its official economic forecasts in 2025, with a surge in fourth quarter growth lifting annual expansion beyond expectations and reinforcing fiscal consolidation efforts, the Ministry of Finance (MOF) announced today.
The economy grew by 6.3 per cent in the fourth quarter of 2025, its strongest performance in three years and above advance estimates.
The late-year acceleration propelled full-year growth to 5.2 per cent, slightly higher than 2024’s 5.1 per cent and comfortably exceeding the Government’s projected range of 4 to 4.8 per cent.
MOF, in a statement on Friday, said the improved performance came despite an uncertain global backdrop, with domestic demand continuing to serve as the principal engine of growth.
At the same time, fiscal discipline remained on track.
The Government recorded a fiscal deficit of 3.7 per cent in 2025, beating its initial target of 3.8 per cent and improving on the 4.1 per cent registered in 2024.
It marks the second consecutive year the MADANI administration has surpassed its deficit reduction target.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim said the strengthening macroeconomic indicators were not merely statistical gains but had delivered concrete benefits to Malaysians.
Unemployment fell to 2.9 per cent, the lowest rate in more than a decade, while inflation eased to 1.4 per cent in 2025 from 1.8 per cent a year earlier.
Savings achieved through fiscal reforms, he said, had been channelled back into targeted social support initiatives, including Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah, as well as continued public infrastructure investment aimed at raising living standards.
“Throughout the three years of the MADANI Government’s administration, it has become increasingly evident that the clear articulation of policy frameworks, as outlined under the MADANI Economy, followed by the consistent implementation of difficult reforms, has strengthened investor confidence in Malaysia.
“This is reflected in the strengthening of the ringgit as the best-performing currency in Asia, increased direct investment and the FTSE Bursa Malaysia KLCI reaching its highest level in seven years,” he said.
He cautioned, however, against complacency in the face of mounting global pressures.
“Although the MADANI Government recognises the progress achieved thus far, we cannot afford to be complacent – especially in the face of global headwinds and escalating trade tensions that continue to affect our lives.
“It is essential that we remain steadfast on the path of MADANI Economy reforms, making 2026 a year to reinforce our resolve to promote higher value-added economic activities, eradicate corruption, enhance the well-being of the people and improve the ease of doing business,” he added.
Looking ahead, the Government expects the economy to remain on a steady course in 2026, supported by resilient domestic demand, firm household consumption and sustained investment activity.
Tourism is anticipated to receive a further boost during Visit Malaysia Year 2026, while planned increases in the minimum wage and civil service salaries are projected to strengthen consumer spending.
Budget 2026 will set the foundation for the Thirteenth Malaysia Plan, covering the period from 2026 to 2030, and will align with broader policy initiatives designed to ensure inclusive and sustainable economic growth.
Even as it sustains development momentum, the MADANI Government reaffirmed its commitment to fiscal prudence to safeguard long-term economic stability. - February 13, 2026
