KUALA LUMPUR — Malaysia’s economy grew 4.4% year-over-year in the first quarter of 2025, falling slightly short of market expectations but remaining within the government’s forecasted range, according to data released Friday, May 16, by Bank Negara Malaysia.
The figure came in just below the 4.5% growth predicted by economists surveyed by Reuters. However, the result aligned with official government projections and signaled sustained economic resilience despite ongoing global uncertainties.
On a quarter-to-quarter basis, Malaysia’s gross domestic product (GDP) grew by 0.7% seasonally adjusted, rebounding from a 0.2% contraction in the final quarter of 2024. That prior quarter was also revised slightly upward to reflect a 4.9% annual expansion.
Household Spending and Investment Fuel Growth
The central bank said the first-quarter growth was driven by strong household spending, underpinned by stable employment conditions and continued policy support. Investment activity remained solid, and export performance improved, contributing to the overall momentum.
Nonetheless, Bank Negara acknowledged certain sector-specific setbacks. A dip in oil and gas output and a slowdown in vehicle sales and production, which had previously surged, tempered broader growth.
“While domestic demand remained healthy, external challenges and sector-specific slowdowns slightly tempered overall performance,” said BNM Governor Abdul Rasheed Ghaffour during a press briefing.
Forecast Adjustments Expected
Looking ahead, Abdul Rasheed warned that full-year GDP growth could fall short of the government’s official forecast of 4.5% to 5.5%. A revised economic outlook is expected in the coming months, with risks currently leaning toward the downside.
Much of that uncertainty stems from mounting international trade tensions. Malaysia is facing a 24% tariff on its exports to the United States beginning in July, unless a reduction or exemption can be negotiated.
Prime Minister Anwar Ibrahim noted that the temporary suspension of most tariffs through mid-year had helped cushion the impact on the economy. However, he acknowledged the nation may struggle to hit its full-year growth target if trade frictions persist.
As global headwinds continue, Malaysian policymakers are expected to closely monitor external risks while implementing measures to stimulate domestic demand and attract investment.
