KUALA LUMPUR: Malaysia's gross domestic product (GDP) is expected to hold steady at five per cent in 2025, consistent with the government's target of 4.5 to 5.5 per cent, according to CIMB Securities Sdn Bhd.

It said in a research note that the forecast is based on the sustained recovery in external demand supported by the global tech upcycle, alongside robust domestic spending driven by strong investments and resilient consumer spending.

"Nevertheless, downside risks have risen. The potential escalation of trade tensions may heighten global inflationary pressures, which may lead to global central banks adopting a more cautious approach to rate cuts, potentially dampening growth prospects.

"We maintain our 2024 GDP growth forecast of 5.2 per cent, within the government's revised projection of 4.8 to 5.3 per cent," said CIMB Securities.

It also said Malaysia's industrial production index (IPI) growth which accelerated to 3.6 per cent year-on-year (y-o-y) in November (Oct 24: +2.0 per cent), was in line with market expectations.

It said the growth pickup was driven by stronger manufacturing output and electricity generation, alongside a slower decline in mining output.

"While the November IPI reversed the slowdown in industrial activity seen in recent months, IPI growth in October and November 2024 still decelerated from the third quarter of 2024 (3Q 2024), signalling softer industrial activity momentum in 4Q 2024.

"Despite challenges in the manufacturing sector, robust performance in the services sector may help offset this weakness," it said.

The Statistics Department Malaysia is expected to release 4Q 2024 GDP estimates this Friday.