Kuala lumpur: 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.
According to BERNAMA News Agency, Bank Negara Malaysia (BNM) governor Datuk Seri Abdul Rasheed Ghaffour stated that 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. 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, partially offset by continued electrical and electronics (E and E) exports and robust tourism activity. Import growth was higher, driven by strong demand for capital goods, reflecting higher investment activities.
On the supply side, 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.
Abdul Rasheed noted 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, 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 was 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.
The governor projected that headline inflation will remain moderate, averaging 1.5 per cent to 2.3 per cent in 2025 amid moderate cost and demand conditions. 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.
Meanwhile, developments surrounding trade tariffs are expected to affect the global and domestic outlook for the rest of the year. The external environment remains challenging, with uncertainty surrounding tariffs imposed by the United States, and the impact will take time to fully materialise. Nevertheless, Malaysia is facing these challenges from a position of strength, supported by resilient domestic demand, continued demand for electrical and electronics goods, and a diversified export structure. These fundamentals, alongside continued structural reforms, ensure that Malaysia is well-positioned to navigate the evolving global landscape.
Notwithstanding the external risks, economic growth is firmly supported by resilient domestic demand, serving as a buffer against global headwinds.