Citi has upgraded Malaysia’s 2025 GDP growth forecast to 4.6% from its previous estimate of 4.4%, following stronger-than-expected advance third-quarter GDP data.

Analyst Wei Zheng Kit notes that growth is expected to ease to 4.4% in Q4 due to external headwinds and sequential normalization. A gradual slowdown is likely into 2026, though Malaysia’s favorable trade deal with the U.S. is expected to mitigate tariff-related impacts compared with most ASEAN peers. Citi maintains its 2026 growth forecast at 4.2%.

Kit highlighted that a gentler export slowdown and approved investments may support near-term foreign direct investment, but economic uncertainty could restrain private capital expenditure. Inflation risks are expected to remain low, supporting the view that Bank Negara Malaysia will maintain rates through 2025-2026.