KUALA LUMPUR, July 18 – Malaysia’s economy is forecast to grow by 4.5 per cent in the second quarter of 2025 (2Q 2025) based on advance gross domestic product (GDP) estimates, slightly outpacing previous quarter’s 4.4 per cent.
Growth is expected to be driven by robust domestic demand amid global headwinds, according to the Statistics Department Malaysia (DOSM).
In a statement today, DOSM said growth momentum was sustained in April and May, with a stronger performance anticipated in June.
“Overall, the economy is estimated to have grown moderately by 4.4 per cent in the first half of 2025,” it said.
Chief statistician Datuk Seri Mohd Uzir Mahidin said domestic consumption remained the key driver, significantly boosted by the lingering effects of public sector wage adjustments, school holidays and seasonal spending during both Hari Raya Aidilfitri and Hari Raya Aidiladha.
A stable labour market, together with low unemployment and inflation rates, further reinforced household spending.
“Cash assistance programmes such as Sumbangan Asas Rahmah and Sumbangan Tunai Rahmah also contributed to sustaining household consumption during the quarter,” he said.
Mohd Uzir noted that the manufacturing sector experienced varied performance in 2Q, growing by 5.6 per cent in April and moderating to 2.8 per cent in May.
“This growth was largely attributed to sustained activity in the electrical and electronics sub-sector and robust demand from domestic-oriented industries, as indicated by the Industrial Production Index.
“Similarly, distributive trade sales, reflecting consumer and business activities, rose by 4.4 per cent in May, easing from 4.7 per cent in April, supported by steady performances in wholesale and retail trade,” he added.
Nevertheless, the external trade sector was mixed, significantly slower in May, influenced by weaker demand for goods exports.
“Overall, while domestic consumption was a strong pillar. The external components of the economy remained challenging, weighed down by surrounding tariff developments and continued global political uncertainties,” said Mohd Uzir.
Sector-wise, he said services remain the primary driver of economic growth in the 2Q 2025, registering a 5.3 per cent growth (Q1 2025: 5.0 per cent), with key contributions from wholesale and retail trade, transportation and storage, and business services sub-sectors.
The manufacturing sector also recorded a growth of 3.8 per cent (Q1 2025: 4.1 per cent), largely supported by production in electrical, electronic and optical products as well as vegetable and animal oils and fats and food processing, he noted.
Mohd Uzir said the construction sector recorded its sixth consecutive quarter of double-digit growth at 11.0 per cent (Q1 2025: 14.2 per cent), supported primarily by non-residential buildings and specialised construction activities.
“The agriculture sector posted a two per cent rise (Q1 2025: 0.6 per cent), driven by the oil palm sub-sector.
“Meanwhile, the mining and quarrying sector declined further to -7.4 per cent (Q1 2025: -2.7 per cent), reflecting lower production across all sub-sectors,” he concluded.
