Malaysia’s 2Q GDP Growth Estimate Of 4.5 Pct Beats Consensus, Shows Economic Resilience -- Economists

By Nur Athirah Mohd Shaharuddin

KUALA LUMPUR, July 18 (Bernama) -- The government’s advance economic growth estimate of 4.5 per cent for the second quarter of 2025 (2Q 2025) beats most analysts’ projections, demonstrating the country’s economic resilience.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the gross domestic product (GDP) growth estimate was higher than the consensus of 4.2 per cent.

He pointed out that the services sector, which accounted for 60 per cent of the economy, saw its growth accelerate to 5.3 per cent from 5.0 per cent in the first quarter of this year, while agricultural output rose 2.0 per cent from 0.6 per cent in the previous quarter.

“All in all, we believe the Malaysian economy is still growing at a healthy clip during the April-June quarter. However, the same cannot be said for the second half of the year, given the US tariff shock, which is likely to affect exports to the United States (US)

“In view of this, Bank Negara Malaysia has pre-emptively cut the overnight policy rate by 25 basis points last week,” he said.

However, Mohd Afzanizam said the ongoing investment spending and expansionary fiscal policies will ensure that the domestic demand will continue to anchor the overall growth, especially during the second half of the year.

Meanwhile, International Islamic University Malaysia associate professor of economics, Dr Muhammad Irwan Ariffin, opined that Malaysia’s economy demonstrated resilience in 2Q 2025, outperforming regional peers such as Indonesia, Vietnam and Thailand.

He noted that the growth was driven by strong domestic demand and steady manufacturing output.

However, Muhammad Irwan warned that weakened export performance amid global trade uncertainties and the looming US tariff on Malaysian goods could pose risks moving forward.

“When we compare to regional peers like Vietnam and Indonesia, which are experiencing stronger growth driven by manufacturing and exports, our reliance on domestic consumption makes us less vulnerable to external shocks. 

“Our reliance on domestic consumption is a strong factor that could stabilise and maintain our growth trajectory till the end of the year,” he said.

However, to maintain the nation’s competitiveness and investors' confidence, Malaysia would need to proactively focus on strategic trade negotiations and policies, said Muhammad Irwan.

“This is to support the manufacturing sector and cushion or mitigate the impact of global trade tensions and disruptions,” he said.

-- BERNAMA