Malaysia's 3Q GDP Growth Signals Strengthening Domestic Momentum -- Economists

By Anas Abu Hassan

KUALA LUMPUR, Nov 14 (Bernama) -- Malaysia’s third quarter (3Q) economic growth is a testament that domestic momentum is strengthening the economy even as external conditions remain uneven, said an economist.

IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan noted that the 5.2 per cent gross domestic product (GDP) growth in 3Q reinforced the narrative of sustained domestic consumption.

He said that the sharp rebound in net exports and the return to a RM12.2 billion current account surplus also highlighted the country’s improving external position, aided by diversified export demand and stabilising regional supply chains.

Additionally, Mohd Sedek believed that while subsidies such as BUDI MADANI RON95 (BUDI95) mechanically depress headline inflation by lowering fuel-related costs, core inflation dynamics have remained broadly stable.

“Together, these indicators point to an economy gradually rebuilding strength from within,” he told Bernama.

Meanwhile, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid opined that external demand has been supportive of overall GDP growth despite having to contend with trade uncertainties resulting from the protectionist measures adopted by the United States.

Nonetheless, he noted that the domestic growth moderated to 5.8 per cent in 3Q 2025 from 7.0 per cent previously as private consumption and investment grew at a modest pace.

“Private consumption, which accounts for more than 60 per cent share in GDP, expanded at a slower rate of 5.0 per cent from 5.3 per cent previously. This suggests that consumers remain cautious in their spending, although the labour market is in full employment status,” he added.

Looking ahead, Mohd Afzanizam believed the growth numbers in 3Q have been quite decent, and the final quarter is projected to grow in the region of 5.0 per cent.

“Going forward, Malaysia’s economy should be able to grow within the official forecast of 4.0 per cent to 4.8 per cent for 2025 and 4.0 per cent to 4.5 per cent in 2026, owing to proactive measures by the Bank Negara Malaysia to cut the Statutory Reserve Requirement (SRR) in May and Overnight Policy Rate (OPR) in July.

“Additionally, expansionary fiscal policies in which more government assistance, such as cash transfers and subsidies, have become more targeted should provide the right cushion from the external uncertainties,” he said.

-- BERNAMA