The Malaysian economy surprised on the upside, with the headline gross domestic product (GDP) expanding 6.3% year-on-year (y-o-y) in the fourth quarter of 2025, exceeding the advance estimate of 5.7%.
Overall, 2025 recorded an annual GDP growth of 5.2% y-o-y.
With the ringgit also outperforming expectations, as well as decent exports growth in 2025, there are plenty of reasons for Malaysia, especially the government, to toot its own horn. One could be forgiven for thinking Malaysia is entering its next period of sustained high growth.
However, some express scepticism on the robust headline numbers amid murmurings of tougher operating conditions on the ground, especially for micro, small and medium enterprises (MSMEs).
Malaysia’s liberal economic policy, especially on foreign investments and imports, has led to some of them being “outpriced” in the domestic market, while support is still not enough to allow them to compete in the international market.
The observations raise the question of whether the Malaysian economy is undergoing a divergence of growth between large multinational corporations and local ones, which dominates exports and GDP growth, and that of MSMEs.
The 6.45% growth in exports in 2025 is also a tale of diverging growth between domestic exports and re-exports. Re-exports, or export of imported goods which are repackaged, sorted or graded in the country without any transformation process, grew by 24.95% in 2025.
Meanwhile, domestic exports of goods and products made or produced in Malaysia only increased by 2% in 2025.
Source: theedgemalaysia