KUCHING: Malaysia’s economy grew 4.4 per cent in the second quarter of 2025, matching the first quarter’s pace, as stronger household spending and higher investment offset weaker commodity exports.
The Central Bank of Malaysia (BNM) said domestic demand prevailed as the main growth driver, supported by positive labour market conditions and income-related measures such as the upward revision of the minimum wage and civil service salaries.
It added that both private and public investments also spiked, spurred by the realisation of new and ongoing projects.
On the supply side, it reported that growth was led by the services and manufacturing sectors, while mining contracted due to lower commodity output.
Seasonally adjusted quarter-on-quarter growth accelerated to 2.1 per cent from 0.7 per cent in the first quarter.
The bank noted that external demand was softer, with export growth slowing on weaker commodity shipments.
“This was partly cushioned by continued electrical and electronics (E&E) exports and strong tourism activity. Imports rose, driven by higher demand for capital goods linked to investment activity,” it said.
BNM said headline inflation eased to 1.3 per cent from 1.5 per cent in the previous quarter, while core inflation held steady at 1.8 per cent.
It explained that lower prices for RON97 petrol and diesel and slower food price increases were the main factors, partly offset by a smaller decline in mobile communication costs.
The bank said the ringgit strengthened during the quarter, gaining 1.5 per cent on a trade-weighted basis and 5.1 per cent against the US dollar.
It attributed this to broad dollar weakness on expectations of slower US growth, trade policy uncertainties, and fiscal concerns in the US, alongside coordinated government – BNM measures to support the currency.
It pointed out that credit to the private non-financial sector expanded by 5.2 per cent.
“Loan growth was steady at 5.5 per cent, with business lending up 4.5 per cent and household loans rising 6 per cent, while demand for investment-related financing remained firm,” it added.
Commenting on this, BNM Governor Datuk Seri Abdul Rasheed Ghaffour said global uncertainties, particularly over tariffs, would weigh on the outlook.
“However, Malaysia is facing these challenges from a position of strength with resilient domestic demand, sustained E&E exports, and a diversified export base.
“Tourism is also expected to remain a key contributor. Headline inflation for the year is projected between 1.5 and 2.3 per cent, lower than earlier forecasts, on moderate cost and demand conditions,” it added.
Looking ahead, the central bank expects 2025 growth to be underpinned by household spending, ongoing infrastructure projects, the continued realisation of approved private investments, and possible gains from favourable trade negotiations.
