BUSINESS OVERVIEW 16 Al-`Aqar Healthcare REIT | Annual Report 2024 MARKET SUMMARY REPORT ECONOMIC OVERVIEW Malaysia’s economic performance remained robust in 2024, with GDP growing at 5.1%, supported by strong domestic demand, resilient private-sector investments, and sustained expansion in key industries. The outlook for 2025 remains positive, with GDP growth projected at 4.5%-5.5%, driven by continued household spending, wage growth, and public-private infrastructure investments. According to Bank Negara Malaysia (BNM), the economy is expected to sustain its momentum, benefiting from higher disposable incomes following minimum wage adjustments and civil servant salary increases, as well as an improving tourism and investment landscape. However, while domestic economic fundamentals remain sound, downside risks persist. Trade tensions and geopolitical uncertainties continue to pose external risks, which could impact Malaysia’s export sector. Additionally, global commodity price volatility remains a concern, with potential implications for inflation and financial market stability. Despite these risks, Malaysia’s economic outlook remains largely resilient, with strong investment pipelines and proactive fiscal measures supporting long-term growth. DATE OPR Level (%) Changes in OPR 20-Jan-21 1.75 - 11-May-22 2.00 +0.25 06-Jul-22 2.25 +0.25 08-Sep-22 2.50 +0.25 03-Nov-22 2.75 +0.25 03-May-23 3.00 +0.25 24-Jan024 3.00 - 22-Jan-25 3.00 - Source: Bank Negara Malaysia Overnight Policy Rate Decisions BNM has maintained the Overnight Policy Rate (OPR) at 3.00%, reinforcing a pro-growth stance while ensuring macroeconomic stability. Inflation averaged 1.8% in 2024, with projections indicating continued containment in 2025, aided by stable global commodity prices and ongoing government interventions, including targeted subsidies and tax incentives. The ringgit is expected to remain stable, underpinned by stronger foreign direct investment (FDI) inflows and structural economic reforms that support capital market growth. For Malaysian REITs, the stable interest rate environment is expected to remain favourable, ensuring manageable financing costs and supporting property valuations. The healthcare real estate sector, in particular, continues to be a key beneficiary of economic stability, given its defensive nature and consistent demand drivers. MEDICAL AND HEALTHCARE TRENDS IN MALAYSIA The private healthcare sector continues to be a key driver of Malaysia’s healthcare industry, supported by an ageing population, increasing prevalence of chronic diseases, and advancements in medical technologies. Private hospital operators are expected to sustain their growth trajectory in 2025, benefiting from rising patient volumes and demand for specialised treatments. The government’s commitment to enhancing healthcare accessibility and quality is reflected in Budget 2025, which has allocated RM45.3 billion towards healthcare, marking a 10% increase from Budget 2024’s RM41.2 billion. This allocation will support hospital expansions, digital health infrastructure, and medical research advancements, further strengthening Malaysia’s healthcare system. Malaysia’s private hospitals continue to experience rising patient volumes, reinforcing growing demand for medical services. This trend is driving increased pharmaceutical consumption, particularly for chronic conditions such as diabetes, cardiovascular diseases, and cancer. The expansion of private healthcare facilities and treatment capabilities is also accelerating demand for specialised medications and advanced medical equipment, enhancing growth prospects for the pharmaceutical and healthcare real estate sectors. Source: CEIC, BIMB Securities CPI VS CPI HEALTH TREND CPI: Health Consumer Price Index (CPI) Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jul-17 Jul-18 Jul-19 Jul-20 Jul-21 Jul-22 Jul-23 Jul-24 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 Apr-22 Apr-23 Apr-24 Oct-17 Oct-18 Oct-19 Oct-20 Oct-21 Oct-22 Oct-23 Oct-24 -3.0% -4.0% -2.0% -1.0% 0.0% 1.0% 4.0% 2.0% 3.0% 5.0% Inflation Rate YoY (%)
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