MSMEs Remain Resilient with Sustained Optimism in 1H 2025
KUALA LUMPUR, June 19 (Bernama) -- Small Medium Enterprise Development Bank Malaysia Berhad ("SME Bank") has released the results of its SME Sentiment Index for the first half of 2025 (“1H 2025”), reflecting continued confidence among Micro, Small, and Medium-sized Enterprises (“MSMEs”) despite anticipating economic and financial challenges arising from the United States’ Tariff announcement. The latest index serves as a timely barometer of entrepreneurial sentiment, combining MSME perspectives with forward-looking indicators to provide valuable insights into the evolving business landscape and Malaysia’s economic trajectory.
“SME Bank’s SME Sentiment Index registered a solid 55.2 in the first half of 2025, reflecting continued optimism among entrepreneurs nationwide. While this marks a slight moderation from 55.8 in the previous half, the index remains well above the neutral level of 50, indicating steady confidence despite a softening from the strong post-COVID rebound observed in earlier surveys. Entrepreneurs are showing more cautious optimism, citing softer expectations around sales, expansion, and hiring. This sentiment echoes broader economic signs, reflecting recalibration in alignment with the MADANI Economic Framework, which prioritises sustainable, inclusive growth. While short-term sentiment has softened, Malaysia remains on a steady growth path, supported by structural reforms, high-quality investments, and a focus on resilience and shared prosperity,” said Datuk Dr. Mohammad Hardee Ibrahim, Acting Group President/Chief Executive Officer of SME Bank.
Key Highlights at a Glance:
- US reciprocal tariff influences MSMEs’ expectation on economic outlook
- Micro businesses foresee better sales performance than previously
- The cost of doing business remains high due to both domestic and international affairs
- MSMEs’ low exposure to external markets is a blessing in disguise
- Slow hiring due to easing sales expectations
- E-invoicing creates a positive impression as implementation kicks in
- Gradual increase in ESG adoption
- Expansion remains as businesses’ top priority, albeit moderating
- MSMEs are deemed to be financially sustainable, but more challenges ahead
Lynette Lee Li Qing, SME Bank’s Chief Economist commented, “As a leading economic indicator, this SME Sentiment Index suggests that Malaysia’s overall economy will continue to expand in 2025, albeit at a modest pace. Our 1Q 2025 GDP growth eased to 4.4% YoY (4Q 2024: 4.9%), the lowest since 1Q 2024 (4.2%) which signals a weak start to the year as it slipped off the official 2025 GDP forecast range (4.5% - 5.5%). World Bank has recently revised Malaysia’s GDP growth forecast down to 3.9%, alongside a cut in global growth due to heightened uncertainties arising from trade tension. Nonetheless, Malaysia’s growth rate is still above some regional peers such as Thailand (3.1%) and Singapore (3.9%).”
“The more measured optimism reflected in the Index is consistent with other leading indicators, including Department of Statistics Malaysia's (“DOSM”) Leading Index which predicts softer economic conditions in the coming months,” she added.
The SME Sentiment Index survey, conducted between January and April 2025, hit a new record high of 2,007 respondents (2H 2025: 1,485), encompassing participants from 39 sectors and across all business sizes. This comprehensive study provided valuable insights into the perspectives and experiences of MSMEs, delivering a broad overview of the business landscape that serves as a benchmark for future economic performance. The full SME Sentiment Index 1H 2025 report, published by SME Bank, can be accessed at: https://go.smebank.com.my/
SOURCE: SME Bank