MIDF head of research Imran Yassin Yusof said 2025 is expected to be a year of steady recovery and more stability for Malaysia, with growth opportunities emerging from both domestic and global fronts.
“Domestic consumption will remain a critical driver of Malaysia’s growth in 2025, and the job market shows positive trends, with rising employment, wage increases, and a growing tourism sector supporting higher consumer spending.
“These factors, combined with government initiatives such as salary hikes for civil servants and cash assistance programmes, will provide a solid foundation for economic expansion,” he said at MIDF’s market outlook event today.
In a presentation titled ‘Market Outlook 2025: Could Be a Turbulent Ride’, Imran said that on top of domestic demand, MIDF anticipates continued growth in external trade but remains cautious of the tighter trade rules that the US could impose.
He said with the expected uncertainties and volatility to continue in 2025 from increased sensitivity of investors to US economic data, new US policies on trade, tariff and tax, and downside from geopolitical conflicts, MIDF believes 2025 will be a turbulent year for the economy and markets.
Meanwhile, in terms of monetary policy, Imran said MIDF expects Malaysia’s overnight policy rate (OPR) to stay at 3% in 2025, which would continue to provide a supportive and accommodative environment for economic activity.
He added that with the US Federal Reserve (Fed) likely to pause its tightening cycle, MIDF is optimistic about the ringgit’s potential for strength in 2025.
Imran said that for 2025, the ringgit is expected to average at RM4.23 versus the US dollar, stronger than the estimated average of RM4.56 this year, supported by sustained growth in domestic demand and external trade recovery.
Nonetheless, he said next year would see slightly higher inflation due to supply factors, mainly rising costs from higher non-food inflation.
On the equity outlook, Imran said MIDF expects continued FTSE Bursa Malaysia KLCI (FBM KLCI) earnings growth in 2025, targeting the benchmark index to beat 1,800 points.
He noted that the local equity market has performed relatively well thus far in 2024, with the benchmark FBM KLCI recording a gain of 0.11% year-to-date until Dec 4.
“Going forward, we expect the local equity market to gain further ground driven by the inflow of foreign funds, underpinned by positive macro and corporate earnings performance, and backed by undemanding valuations,” he added.