Kuala Lumpur: Malaysia’s economy is projected to continue its growth trend, albeit at a slower rate, bolstered by solid economic fundamentals, as reported by MIDF Amanah Investment Bank Bhd.

According to BERNAMA News Agency, the leading index (LI), a crucial indicator of the nation’s economic trajectory, increased by 0.6% year-on-year (y-o-y) to 112.5 points in March 2025, rising from 111.9 points a year prior. This follows a minor 0.1% y-o-y increase in February 2025. The investment bank noted that while favorable trade outcomes with the United States might ease some trade-related challenges, uncertainties in the external environment persist.

Domestic economic growth is anticipated to remain the primary driver of Malaysia’s economy in the foreseeable future. Despite the positive movement, the smoothed long-term trend indicates that the LI in March 2025 is still below the 100.0-point mark.

MIDF highlighted that the LI’s improvement was largely driven by significant expansions in the number of housing units approved, which surged by 27.8% y-o-y, and the real imports of semiconductors, which rose by 22.3% y-o-y. However, on a month-on-month (m-o-m) basis, the LI remained unchanged during March, with a marginal dip of 0.04% m-o-m, following a 0.02% m-o-m decline in February 2025. This marks the second consecutive month of relatively flat performance.

The subdued monthly performance is attributed to declines in the Bursa Malaysia Industrial Index, which fell by 0.2% m-o-m, and real imports of semiconductors, which decreased by 0.2% m-o-m, following a 0.3% m-o-m increase in January 2025.

Nonetheless, the investment bank observed that the coincident index (CI), reflecting current economic performance, exhibited slower growth of 1.4% y-o-y in March 2025, compared to a 1.9% y-o-y increase in February 2025, reaching 126.8 points, up from 125.1 points in March 2024.

The sustained growth in the CI was supported by broad-based gains across all its components, except for the real contributions to the Employees Provident Fund. On a monthly basis, the CI declined by 0.2% m-o-m during March, reversing the positive trend of a 1.8% m-o-m increase in February 2025, and returning to negative territory as seen in January 2025.

The decline in CI is mainly attributed to a contraction in capacity utilization in manufacturing, which decreased by 0.3% m-o-m, following a 2.3% m-o-m increase in February 2025. Additionally, both total employment and real salaries and wages in the manufacturing sector recorded a slight decline of 0.1% m-o-m, after a flat reading in the previous month.