Malaysia predicted to be ASEAN’s second-fastest-growing economy, after Vietnam

Malaysia is poised to become the second-fastest-growing economy in the Association of Southeast Asian Nations (ASEAN) after Vietnam, data showed.

Malaysia’s stronger-than-expected performance over the first nine months has laid a firm foundation for the years ahead, giving policymakers and investors greater visibility for the remainder of 2025 and into 2026, analysts said.

HSBC Global Investment Research (HSBC Research) is the latest to turn more optimistic, raising its 2025 GDP forecast to 5% from the previous estimate of 4.2%.

Malaysia’s growth outlook is being bolstered not only by domestic resilience but also by the government’s adoption of a flexible diplomatic strategy. Its proactive diplomacy, particularly at the 47th ASEAN Summit, reflects an ability to maintain neutrality while engaging major trading partners, helping to reduce external uncertainties.

HSBC noted that, alongside Indonesia, Malaysia is likely to be the second-fastest-growing economy in ASEAN, behind Vietnam.

Maybank Investment Bank Bhd (Maybank IB) echoed the brighter outlook, revising its 2025 GDP forecast to 4.7% from 4.2% and lifting its 2026 projection to 4.5% from 4.1%. Resilient domestic demand remains the anchor of Malaysia’s growth narrative, even as net external demand continues to fluctuate, it said.

Standard Chartered Global Research also upgraded its 2025 GDP estimate to 4.7% from 4.2%, following Malaysia’s solid nine-month expansion of 4.7% this year. However, it trimmed its 2026 outlook from 5% to 4.5%, citing a likely slowdown in external demand compared with this year.

Malaysia’s central bank is expected to keep its overnight policy rate (OPR) unchanged at 2.75%. As a result, consumption and investment activity are expected to continue supporting economic growth in the coming quarters.

CIMB Securities Sdn Bhd raised its 2025 forecast to 4.5% from 4.3%, while growth is projected to ease to 4.1% in 2026. However, with Malaysia’s major trading partners expected to expand at a slower pace, external demand is likely to soften in 2026.