The Scotsman had a good start, breaking Raonic in his first two service games and taking the took the opening set.
He got until 5-3 in the second set, but then Raonic staged a small comeback before Murray took the tie-break. “It was good to finish the year with a win. It was a good match to work on returns as Milos has a strong serve,” he said.
"I still feel like Andy Murray, that feels more normal, but I am happy with the knighthood and it is a nice way to start the new year."
In Friday's semi-finals, Murray lost to Belgium's David Goffin for the first time in six meetings.
Murray, who had won all five of his previous meetings with the 11th-ranked Belgian, was beaten 7-6 (7/4), 6-4.
Murray's next stop is neighbouring Qatar for the opening week of the ATP season and two weeks out from the Australian Open, the first Grand Slam of 2017.