Research Firms Raise Malaysia’s 2025 GDP Growth Forecast To 4.2-4.3 Pct

KUALA LUMPUR, Aug 18 (Bernama) — Research firms have raised Malaysia’s 2025 gross domestic product (GDP) growth forecast to 4.2 per cent and 4.3 per cent following its expansion by 4.4 per cent in the second quarter of 2025 (2Q 2025). 

In a research note, MBSB Investment Bank Bhd adjusted its 2025 GDP growth projection to 4.3 per cent from 4.0 per cent previously, considering that the 2Q 2025 GDP is slightly lower than the advance estimate, while the first half of 2025 (1H 2025) growth is still better than its earlier estimate.

“While commodity exports have declined, external trade has shown greater resilience than previously anticipated due to front-loading effects and an improvement in re-exports.

“Nevertheless, we still maintain that the higher tariffs, albeit lower than previously announced and what we factored in earlier, would affect external demand, particularly from the United States (US),” it said. 

The investment bank also anticipated that there would be more support for the 2H 2025 growth from the pre-emptive overnight policy rate (OPR) cut and the additional fiscal measures announced last month.

“While domestic demand will ensure sustained growth going forward, downside risks remain, especially from the external uncertainties, weaker demand from major markets and the possibility of higher price pressures from policy changes.

“On the trade front, despite Malaysia already getting a deal with the US, the trade outlook remains uncertain as the US indicates plans to impose a 100 per cent tariff on the semiconductor industry, creating another downside risk as it accounts for the largest share of Malaysia’s trade with the US,” it added. 

Meanwhile, in a separate note, Maybank Investment Bank Bhd raised its 2025 real GDP growth forecast slightly to 4.2 per cent from 4.1 per cent, given the 1H 2025 growth of 4.4 per cent and the notably resilient 2Q 2025 growth. 

The investment bank also tweaked the 2026 growth forecast to 4.1 per cent from 4.2 per cent following the change to the 2025 forecast.

It said “domestic tailwinds versus external headwinds” remains the narrative on growth dynamics.

“External headwinds on growth remain despite the clarity on US reciprocal tariffs on its trading partners, with the final rate of 19 per cent for Malaysia.

“This is (also) due to the uncertainties on product-specific tariffs by the US, especially the semiconductor tariff,” it said. 

The bank emphasised that semiconductors are Malaysia’s major exports to the US, currently exempted from the reciprocal tariff.

“Positively, there are domestic tailwinds keeping the economy on the growth path.

“Consumer spending is supported by income growth reflecting favourable job market conditions, income-lifting measures, such as the minimum wage hike, the 25 basis points OPR cut by Bank Negara Malaysia (BNM), and additional consumer-friendly measures (announced on July 23, 2025),” it said. 

Maybank said the investment upcycle is sustained by the ongoing realisation of robust approved private investment since 2021, domestic direct investment by government-linked investment companies, progress in major infrastructure projects, and the impact of strategic initiatives like the Johor-Singapore Special Economic Zone. 

Last Friday, BNM announced that the Malaysian economy expanded by 4.4 per cent in 2Q 2025, equivalent to 4.4 per cent growth in the 1H 2025, driven by robust domestic demand as household spending was higher. 

— BERNAMA

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