Kuala Lumpur – Malaysia recorded a 4.4% year-on-year GDP growth in the first quarter of 2025, supported by resilient domestic demand and continued investment activity. The country’s economic outlook, however, remains cautiously optimistic amid global uncertainties and softening external demand.
According to Bank Negara Malaysia Governor Abdul Rasheed Ghaffour, the sustained momentum was underpinned by steady household consumption, bolstered by positive labor market conditions and income-related policies, including adjustments to the minimum wage and civil servant salaries.
Investment activity also expanded during the quarter, driven by the implementation of ongoing and newly initiated projects. This indicates continued confidence among investors and reflects the structural strength of Malaysia’s domestic economy.
On the external front, Malaysia saw slower export growth due to weaker performance in the mining sector, particularly in oil and gas. However, this decline was partially offset by stronger exports of electrical and electronic goods and a rebound in tourism-related revenues.
Quarter-on-quarter, Malaysia’s economy grew by 0.7% on a seasonally adjusted basis, reversing a 0.2% contraction recorded in Q4 2024. The data points to a measured but steady recovery, despite softer global trade conditions.
Governor Abdul also highlighted the increasing complexity of the global environment. Escalating geopolitical tensions and uncertainty over trade tariffs are likely to shape global demand and disrupt trade flows throughout the rest of 2025. Malaysia, as a small and open economy, is expected to feel both the direct and indirect impacts of these developments.
The initial full-year GDP growth forecast of 4.5% to 5.5% is now under review. Revised projections will be released once greater clarity is achieved on external conditions, particularly surrounding global trade negotiations and geopolitical risks.
Despite these external risks, domestic demand continues to act as a stabilizing force. Private consumption and business investment are expected to remain the primary growth drivers, providing a critical buffer against international volatility.
