By Azanis Shaila Aman

Malaysia is poised to be the second-fastest-growing economy in Asean after Vietnam, as a string of upbeat data prompts major research houses to lift their full-year growth forecasts.

Analysts say the country’s stronger-than-expected nine-month performance has set a firmer foundation for the years ahead, giving policymakers and investors a clearer runway for the rest of 2025 and into 2026.

HSBC Global Investment Research (HSBC Research) is the latest to turn more optimistic, raising its 2025 gross domestic product (GDP) forecast to five per cent from 4.2 per cent previously.

The bank expects Malaysia’s growth prospects to be buoyed not only by domestic resilience but also by its deft diplomatic positioning.

It said Malaysia’s proactive diplomacy, particularly at the recent Asean Summit, reflected the nation’s ability to maintain neutrality while bringing major trading partners to the same table, a trait that helps reduce external uncertainty.

“Given the better-than-expected outturn, reduced trade uncertainty and domestic resilience, we are upgrading our GDP growth forecast to five per cent for 2025, from 4.2 per cent.

“This means Malaysia is likely to be Asean’s second-fastest-growing economy, alongside Indonesia and just behind Vietnam,” HSBC Research said in a note.

The research house also bumped up its 2026 projection to 4.5 per cent from four per cent earlier.

Maybank Investment Bank Bhd (Maybank IB) echoed the brighter outlook, revising its 2025 GDP forecast to 4.7 per cent from 4.2 per cent, and raising its 2026 projection to 4.5 per cent from 4.1 per cent.

Analysts Suhaimi Ilias and Azril Rosli said resilient domestic demand remains the anchor of Malaysia’s growth narrative, even as net external demand remains volatile.

“Income indicators, policy support and the ongoing recovery in tourism are pointing to firm consumption ahead,” they said in a macroeconomic report.

Standard Chartered Global Research also upgraded its 2025 GDP estimate to 4.7 per cent from 4.2 per cent, following Malaysia’s solid nine-month expansion of 4.7 per cent this year.

However, it trimmed its 2026 outlook to 4.5 per cent from five per cent, citing normalising external demand after earlier export front-loading.

“Consumption and investment activity should continue to support growth in the coming quarters,” it said, adding that Bank Negara Malaysia is likely to keep the overnight policy rate (OPR) unchanged at 2.75 per cent.

CIMB Securities Sdn Bhd joined the chorus of upgrades, lifting its 2025 forecast to 4.5 per cent from 4.3 per cent, before expecting growth to ease to 4.1 per cent in 2026.

It said first-quarter 2026 activity should remain healthy, helped by festive spending and the RM100 mid-February cash transfer to Malaysian adults.

The firm said credit growth in July and August strengthened following the 25-basis-point OPR cut in July, led mainly by business lending.

“Household and working-capital loans, typically a proxy for future investment, remained modest,” it added.

But with major trading partners set to grow at a slower pace, CIMB Securities expects Malaysia’s external demand to soften in 2026, supporting its view of another 25-basis-point rate cut in the second quarter next year.