Kuala Lumpur, 27 October 2024 - Alliance Bank Malaysia Berhad (“Alliance Bank” or “Bank”) is anticipating solid growth in Malaysia’s economy for the year 2025. The government has revised the GDP growth projection for 2024 to 4.8-5.3% (from 4.0-5.0% previously). For 2025, the government expects GDP growth of 4.5-5.5% which reflects positive economic momentum. The country’s economic growth rate is driven by healthy labour market conditions. Positively, Malaysia's unemployment rate in August 2024 declined further to 3.2% while the labour force continues to increase resulting in a high labour participation rate of 70.4% in August 2024.
On 18 October 2024, Malaysia unveiled its 2025 Budget with the theme of “Reinvigorating the Economy, Driving Reforms, and Prospering the Rakyat.” The 2025 Budget has the largest allocation ever, RM421 billion, compared to RM408 billion for 2024. The 2025 Budget is constructed based on the objectives of revitalising the economy, catalysing transformational changes and improving the overall well-being of the Rakyat. The 2025 Budget highlights the Madani Government’s proactive measures in narrowing down the fiscal deficit, forecast at 3.8% in 2025 compared with 4.3% for 2024.
“The budget is a testament to the government’s commitment to responsible fiscal management and continued priority for effective governance,” said Mr Kellee Kam Chee Khiong, the Group Chief Executive Officer of Alliance Bank.
The 2025 Budget reflects the government’s intention to drive investments with initiatives such as the New Investment Incentive Framework, which will introduce a strategic investment fund of RM1 billion to enhance local capacity and encourage high-value activities. In addition, Government-Linked Investment Companies (GLICs) have pledged to invest RM120 billion in domestic direct investments over the next 5 years. Khazanah Nasional will establish a National Fund-of-Funds with a RM1 billion to support venture capital fund managers to invest in start-up companies.
Recognising the importance of developing SMEs, government agencies will provide various loan facilities and financing support for this segment. This includes a RM3.8 billion fund by Bank Negara Malaysia to support greater adoption of digitalisation and automation. To advance the country’s net-zero ambitions, over RM300 million will be included under the National Energy Transition Facilitation (NETF) fund in 2025, compared to RM100 million this year.
“We are confident that the budget will undoubtedly stimulate additional investments and evidences the government’s persistent efforts on strengthening the nation’s economic fundamentals. This is a progressive budget that has a prudent balance between the economy, sustainability, the adoption of digital investments and wellbeing of the Rakyat,” added Mr Kam.
Overall, the 2025 Budget covers a wide spectrum in addressing issues concerning people and businesses. The 2025 Budget has salient features that prioritise the welfare of the Rakyat, accelerate the nation’s economy, attract more investments, help pave the way to new markets, and embrace digital adoption.
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