Small Medium Enterprise Development Bank Malaysia Bhd (SME Bank) reported that Malaysia’s SME Sentiment Index for the first half of 2025 (1H 2025) stood at 55.2, reflecting continued optimism among Micro, Small and Medium-sized Enterprises (MSMEs), despite moderating expectations and external headwinds.
Acting Group President and Chief Executive Officer Datuk Dr Mohammad Hardee Ibrahim said while the reading dipped slightly from 55.8 in the previous half, it remains above the neutral threshold of 50, signalling steady confidence amid a recalibration in expectations around sales, expansion and hiring. The sentiment, he said, aligns with the MADANI Economic Framework, which emphasises sustainable and inclusive growth.
Key concerns among MSMEs include the anticipated economic and financial implications of the United States’ reciprocal tariff announcement. However, SME Bank noted that MSMEs’ relatively low exposure to external markets has buffered the impact, with micro businesses anticipating better sales performance than previously forecast.
Hiring sentiment has weakened in tandem with softer sales expectations. Despite that, expansion continues to be a priority, albeit at a moderated pace. Businesses also reported the cost of operations remaining high, driven by both local and global economic conditions.
Chief Economist Lynette Lee Li Qing said the Index suggests Malaysia’s economy will maintain a positive trajectory in 2025, though growth may moderate. “1Q 2025 GDP growth eased to 4.4% year-on-year from 4.9% in 4Q 2024, the slowest since 1Q 2024 and slightly off the government’s 2025 target range of 4.5% to 5.5%,” she said.
The World Bank recently adjusted Malaysia’s GDP forecast to 3.9%, citing global trade uncertainties. Nonetheless, the country’s growth is still outpacing some regional peers including Thailand and Singapore, both at 3.9% and 3.1% respectively.
Lee added that the more measured optimism in the Index is in line with the Department of Statistics Malaysia’s Leading Index, which points to softer conditions in the coming months.
The survey, conducted from January to April 2025, drew a record 2,007 responses, up from 1,485 in the previous period, covering 39 sectors and businesses of all sizes. Positive sentiment was also noted towards the government’s e-invoicing rollout and gradual ESG adoption, while MSMEs were generally deemed financially sustainable but remain cautious about near-term challenges.
Source: https://www.businesstoday.com.my/2025/06/19/msme-confidence-holds-firm-despite-softer-economic-outlook-says-sme-bank/