Kuala lumpur: Economists have projected the Malaysian economy to expand between 4.5 percent and 5.5 percent in the second quarter of 2025 (2Q 2025), driven partly by increased export demand, especially from United States (US) importers due to heightened fears of impending tariffs in August. Putra Business School Associate Professor Dr. Ahmed Razman Abdul Latiff noted that the service, manufacturing, and construction sectors are likely to contribute the most to the 2Q 2025 growth. He also mentioned the potential for the mining and agriculture sectors to make a higher economic contribution.
According to BERNAMA News Agency, the Statistics Department Malaysia (DOSM) is scheduled to announce the advance GDP estimates for 2Q 2025 on Friday, July 18, followed by an official announcement on August 15, 2025. However, Ahmed Razman cautioned that the growth momentum could decelerate in the second half of the year (2H 2025) once the US tariff comes into effect. He also mentioned that the recent reduction of the overnight policy rate (OPR) might catalyze the domestic market to generate higher demand for products and services. On July 9, Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) reduced the OPR by 25 basis points to 2.75 percent as a pre-emptive measure to preserve Malaysia’s steady growth path amid moderate inflation prospects. BNM last kept the OPR at 2.75 percent in March 2023, before increasing it to three percent in May 2023.
Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid shared similar views, noting that front-loading activities may benefit Malaysia’s external sector. He highlighted that exports to the US jumped 33.6 percent in the first five months of 2025, which will sustain growth in 2Q 2025 along with Malaysia’s full employment status. However, Mohd Afzanizam expressed concern that the 2H 2025 economic conditions will be more critical with the US tariff effective August 1, 2025. He expects US demand to moderate as Americans will have to pay more for imported goods, leading to growth moderation in 2H 2025.
Mohd Afzanizam expects 2025 full-year growth to slow to 4.1 percent against BNM’s earlier growth projection of between 4.5 and 5.5 percent, with 2H 2025 GDP expanding to 3.7 percent. The US unexpectedly imposed a higher tariff of 25 percent on all Malaysian exports effective August 1, 2025, one percent higher than the 24 percent announced in April 2025. While negotiations for lower tariffs are ongoing, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz stated that BNM is currently analyzing this year’s economic outlook and the tariff impact, with the official economic outlook remaining unchanged.