HSBC Global Research expects growth at 4.6 percent

HSBC Global Research is expecting Malaysia’ economic growth at 5.0 percent this year before settling around 4.6 percent in 2025.

This is due to investment being held up by the growth momentum while trade recovery caught up with consumption.

“As the global trade has improved substantially since the start of this year, trade-dependent economies in Asia, particularly the ones with heavier exposure to the electronics supply chain, have been benefiting.

“Malaysia is no exception, given its significance in the technology supply chain,” it said in a note last night.

The note was in reaction to Malaysia’s economic growth of 5.3 percent in third quarter this year.

It noted that the trading pace is till slower than regional peers such as Korea and Taiwan that are directly exposed to AI powered chips.

“Today’s GDP breakdown by expenditure indicated there is room for Malaysia’s trade sector to improve, further boosting growth,” it said.

HSBC also factored un US trade policies under incoming US president, Donald Tump which doesn’t look positive.

“A closer look at trade by individual Asean economies with the US reveals that the region has gained substantial market share in certain sectors since the start of the US-China trade tensions.

“For example, Vietnam’s textiles and footwear sector, as well as Malaysia’s semiconductor and Thailand’s auto parts sectors may be some areas that are vulnerable to tariff risks,” it said.

Despite a continued recovery in trade, the firm said consumption and investment have come to the partial rescue.

It added that despite moderating from the second quarter, growth momentum remained strong at 1.8 per cent quarterly in the 3Q.

“What caught our eyes is the impressive growth in gross fixed capital formation (GFCF), whose momentum itself grew close to 6.0 per cent q-o-q, pushing y-o-y growth to over 15 per cent in 3Q only.

“The strength came from both the public and private side. We surmise this was likely related to investment in data centres and public infrastructure,” it added.