23 BUSINESS OVERVIEW Integrated Annual Report 2025 OPERATING ENVIRONMENT RESILIENT ECONOMIC LANDSCAPE UNDERPINNED 2025 PERFORMANCE Throughout FY2025, Al-`Aqar navigated a shifting macroeconomic landscape characterised by both emerging opportunities and external challenges. Global economic output reached an estimated 3.3% in 2025, rebounding in the second half of the year after a slow start. The International Monetary Fund (“IMF”) projects this growth to hold steady at 3.3% in 2026, with a slight moderation to 3.2% in 2027. Despite this stability, persistent trade tensions remain a primary risk, with the potential to disrupt global supply chains and impact the vibrancy of financial markets. Al- `Aqar remains vigilant, ensuring our strategic planning accounts for this international volatility. Global growth is expected to be driven by emerging economies, with projections holding steady at 4.0% for 2026 and 2027. In contrast, advanced economies are forecast to moderate to 1.8% and 1.7% over the same period. Notably, the US economy is anticipated to expand by 2.4% in 2026, bolstered by lower policy rates, supportive fiscal measures, and sustained momentum from late 2025. Complementing this growth, global headline inflation is projected to gradually retreat from 4.2% in 2025 to 3.8% in 2026 and 3.4% in 2027. Domestically, the Malaysian economy demonstrated exceptional strength, recording a full-year Gross Domestic Product (“GDP”) growth of 5.2% in 2025. This performance significantly exceeded the forecast range of 4.0% to 4.8% set by Bank Negara Malaysia, the IMF, and the World Bank. Key indicators from the Department of Statistics Malaysia (“DOSM”) further reinforce this upward trajectory: the unemployment rate reached an 11-year low of 2.9% by year-end, while headline inflation remained stable at 1.4%. Additionally, the Malaysian Ringgit emerged as the topperforming currency in Southeast Asia, appreciating by approximately 10.3% against the US Dollar by December 2025. Building on the momentum of 2025, Malaysia’s economic growth is projected to remain steady throughout 2026. While a slight moderation is anticipated due to geopolitical tensions and shifting global tariff policies, domestic fundamentals remain resilient. According to the Ministry of Finance’s Outlook 2026, headline inflation is expected to remain well-contained between 1.3% and 2.0%. While global uncertainties present downside risks, the strength of the domestic economy provides a stable environment for Al-`Aqar’s continued operational growth and strategic execution. Ongoing fiscal consolidation and structural policy reforms continue to bolster investor confidence, sustaining strong Foreign Direct Investment (“FDI”) inflows. This momentum is particularly evident in the data centre, technology, and Electrical and Electronics (“E&E”) sectors. Furthermore, Malaysia’s pivotal role in the global E&E value chain remains a cornerstone of export growth, with the sector’s inherent resilience expected to drive national trade performance throughout 2026. MEDICAL AND HEALTHCARE TRENDS IN MALAYSIA Malaysia’s healthcare sector is entering a phase of structural expansion, supported by long-term demand drivers as opposed to short-term economic cycles. Healthcare demand remains inherently non-discretionary, driven by population health needs, epidemiological trends, and public policy priorities. These characteristics position healthcare as a resilient segment of the economy, with direct implications for the stability and utilisation of healthcare real estate assets. Malaysia operates a dual healthcare system comprising a publicly funded healthcare network alongside a welldeveloped private healthcare sector. While public healthcare continues to ensure broad access to essential services, the private healthcare segment has increasingly driven capacity expansion, service differentiation and adoption of advanced medical technologies. This has supported sustained utilisation levels across private hospitals and specialist medical centres, reinforcing demand for modern, purpose-built healthcare facilities. Healthcare expenditure in Malaysia continues to trend upward, supported by rising income levels, increasing health awareness, and greater willingness among patients to seek private healthcare services. At the same time, private healthcare providers have expanded their focus on specialised and higher value-added treatments, strengthening Malaysia’s position as a regional healthcare destination. From a real estate perspective, these developments translate into consistent occupancy, longer operating hours, and sustained relevance of healthcare assets across economic cycles.
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