The latest Coincident Index MoM for Malaysia (MY) rose by 0.20% in November 2025, according to the Sigmanomics database. This marks a notable recovery from October’s -0.60% contraction and aligns with market expectations. Over the past 12 months, the index averaged a modest 0.07% MoM, highlighting persistent economic fluctuations amid global headwinds.

Drivers this month

• Manufacturing output stabilized, contributing 0.12 pp.
• Retail sales improved, adding 0.05 pp.
• Services sector growth slowed, subtracting -0.02 pp.
• Export demand remained flat, neutral impact.

Policy pulse

The Bank Negara Malaysia maintained its benchmark interest rate at 3.25%, signaling a cautious stance amid inflation hovering near 3.50%, slightly above the 2-3% target range. Financial conditions tightened marginally due to global monetary normalization, limiting upside momentum.

Market lens

Immediate reaction: The MYR/USD currency pair strengthened by 0.15% within the first hour post-release, reflecting improved sentiment. The 2-year government bond yield edged down 3 basis points, indicating reduced short-term risk premia.

Malaysia’s core macroeconomic indicators present a nuanced picture. Industrial production grew 1.10% YoY in October, up from 0.70% in September, supporting the positive index reading. However, inflation remains sticky at 3.50% YoY, pressured by food and energy prices. Unemployment held steady at 3.40%, near historical lows but with underemployment concerns.

Monetary Policy & Financial Conditions

Monetary policy remains accommodative but vigilant. The central bank’s pause in rate hikes reflects balancing growth risks against inflation persistence. Credit growth slowed to 5.20% YoY, down from 6.00% earlier in 2025, signaling cautious lending amid tighter global liquidity.

Fiscal Policy & Government Budget

Fiscal policy continues to support growth with targeted infrastructure spending and social programs. The government’s budget deficit narrowed to 3.10% of GDP in Q3 2025, improving from 3.50% in Q2, but debt levels remain elevated at 62% of GDP, limiting fiscal space for stimulus.

Comparing the current print to historical data, the index has oscillated between -1.40% and 1.90% over the past year, reflecting sensitivity to external shocks such as commodity price swings and geopolitical tensions in the region. The recent positive momentum aligns with improved manufacturing and retail activity, offsetting weaker services growth.

Market lens

Immediate reaction: Following the print, the MYR/USD currency strengthened modestly, while short-term yields declined, reflecting improved risk appetite. Equity markets showed mild gains, with the FTSE Bursa Malaysia KLCI rising 0.30% in early trading.

Looking ahead, Malaysia’s economic trajectory hinges on several factors. The baseline scenario (60% probability) forecasts moderate growth with the Coincident Index maintaining 0.10-0.30% MoM gains, supported by stable domestic demand and gradual export recovery. Inflation is expected to ease toward the 2.50% range by mid-2026, allowing monetary policy to remain steady.

Bullish scenario (20%)

• Stronger global growth boosts exports and manufacturing.
• Commodity prices stabilize, easing inflation pressures.
• Fiscal stimulus accelerates infrastructure investment.

Bearish scenario (20%)

• Geopolitical tensions disrupt trade flows.
• Inflation spikes force monetary tightening.
• Global financial conditions tighten sharply, curbing credit.

Risks & Opportunities

External shocks remain the largest downside risk, particularly from China’s growth slowdown and US monetary policy shifts. Conversely, structural reforms and digital economy expansion offer long-run growth potential.

Malaysia’s November 2025 Coincident Index MoM print of 0.20% signals tentative economic stabilization after recent volatility. While core indicators show mixed momentum, the overall outlook remains cautiously optimistic. Policymakers face a delicate balance between sustaining growth and managing inflation amid external uncertainties. Financial markets have responded positively but remain sensitive to geopolitical and fiscal developments. Structural reforms and fiscal prudence will be key to supporting a durable recovery.

Insight: Coincident Index vs. MYRUSD Since 2020

Since 2020, Malaysia’s Coincident Index MoM has shown a positive correlation (~0.65) with the MYRUSD exchange rate. Periods of index expansion often coincide with MYR appreciation, reflecting improved economic fundamentals and investor confidence. For example, the strong rebound in April 2025 (1.90%) aligned with a 2.50% MYRUSD gain. This relationship underscores the index’s value as a real-time economic barometer influencing currency markets.

Final takeaway: Malaysia’s November 2025 Coincident Index MoM rebound to 0.20% suggests cautious optimism amid persistent global and domestic challenges. Continued monitoring of policy responses and external risks will be critical for sustaining growth momentum.