• Key policy rate: 3% (March 2025)
• GDP growth rate: 5.1% (2024)
• 2025 GDP growth target: 4.5-5.5%
• Manufacturing Purchasing Managers’ Index reading: 48.8 (March 2025)
• Inflation rate: 1.5% (February 2025) 

Malaysia’s economy is firing across all cylinders, with both public and private investments recording double-digit increases.

The services sector accounts for nearly 60 per cent of Malaysia’s GDP, benefiting from a young and literate population where the median age is 31. This is followed by the industrial sector that accounts for 27 per cent of the domestic economy, led by a particularly upbeat construction sector that soared by 6.1 per cent in 2023. Agriculture accounts for 12.6 per cent, with its top product being palm oil.  

By expenditure, household spending – which accounts for about 60 per cent of Malaysia’s GDP – continues to grow, albeit slower than its pre-pandemic pace. Growth is driven largely by capital investments, which rose by 5.5 per cent in 2023 per government data. Government expenditures have also picked up over the past year on the back of continued fuel and electricity subsidies and higher salaries paid to civil servants, both supporting a more vibrant private consumption by leaving households with more disposable income.

On the monetary policy front, Malaysia’s central bank has kept the key interest rate steady since May 2023 with inflation remaining low and manageable while growth chugs ahead, which is contrary to the global rate-cutting cycle. A low interest rate environment supports rapid economic expansion for Malaysia.

House view: Lundgreen’s see Malaysia, along with its Southeast Asian peers, to be among leaders of global growth in the years to come. The low inflation, high growth environment is conducive to attract more foreign investments into the country.

Updated as of 22 April 2025