Malaysia's Economy Grows 4.4 Pct In 2Q 2025, Driven By Robust Domestic Demand

KUALA LUMPUR, Aug 15 (Bernama) -- The Malaysian economy expanded by 4.4 per cent in the second quarter of 2025 (2Q 2025), equivalent to 4.4 per cent growth in the first half of 2025, driven by robust domestic demand as household spending was higher.

In 2Q 2024, the country’s economy expanded by 5.9 per cent.

Bank Negara Malaysia (BNM) governor Datuk Seri Abdul Rasheed Ghaffour said household spending was higher amid positive labour market conditions and income-related policy measures, including the upward revision of minimum wage and civil servant salaries.

“Of significance, both private and public investments recorded stronger expansion, supported by the realisation of new and existing projects.

“In the external sector, export growth was slower due mainly to lower commodities-related exports. This was partially offset by continued electrical and electronics (E&E) exports and robust tourism activity,” he said when announcing the 2Q 2025 gross domestic product (GDP) performance here, today. 

At the same time, the central bank governor said import growth was higher, driven by strong demand for capital goods, reflecting higher investment activities.

On the supply side, he said growth was driven by the services and manufacturing sectors.

“The services sector was supported by consumer-related and government services, while steady growth in domestic-oriented clusters underpinned the performance in the manufacturing sector.

“Overall growth was weighed down by a contraction in the mining sector amid lower commodities production,” he said.

Abdul Rasheed highlighted that on a quarter-on-quarter, seasonally-adjusted basis, growth expanded by 2.1 per cent from 0.7 per cent in 1Q 2025.

Regarding inflation, he said headline inflation moderated to 1.3 per cent, while core inflation remained stable at 1.8 per cent compared to 1.5 per cent and 1.8 per cent in 1Q 2025, respectively.

“This is largely due to lower prices for fuel such as RON97 petrol and diesel, and slower price increases for food-related items, particularly fresh food and food away from home,” he said.

Abdul Rasheed said the headline inflation is projected to remain moderate, averaging 1.5 per cent to  2.3 per cent in 2025 amid moderate cost and demand conditions.

“Notably, the headline inflation forecast range for the year was revised lower following the more moderate demand and cost outlook since the earlier projections in March 2025,” he said.

Meanwhile, Abdul Rasheed said BNM expects developments surrounding trade tariffs to affect the global and domestic outlook for the rest of the year.

He opined that the external environment remains challenging, with uncertainty surrounding the tariffs imposed by the United States continuing to linger, and the impact will take time to materialise fully.

“Nonetheless, Malaysia is facing these challenges from a position of strength. Our economy remains on a solid footing, supported by resilient domestic demand, continued demand for electrical and electronics (E&E) goods, and a diversified export structure.

“These fundamentals, alongside continued structural reforms, ensure that Malaysia is well-positioned to navigate the evolving global landscape,” he added.

Notwithstanding the external risks, Abdul Rasheed said economic growth is firmly supported by resilient domestic demand, serving as a buffer against global headwinds.

-- BERNAMA