21-07-2025
HLIB maintains 2025 GDP growth forecast at 4.0% amid global uncertainty
MALAYSIA released advance estimate for quarter two 2025 (2Q25) on 18th Jul, based primarily on two months of published production data (Apr and May) and estimates for Jun, to estimate the gross domestic product (GDP) by production sector.
'On a year-on-year (YoY) basis, GDP growth ticked up to +4.5% YoY, while on a quarter-on-quarter (QoQ) basis, Malaysia's economy rebounded by +1.0%,' said Hong Leong Investment Bank (HLIB). Actual 1Q25 GDP print will be released on 15th Aug 2025.
Services sector: +5.3% YoY. Growth was mainly driven by sustained growth across all sectors, particularly the wholesale & retail trade, transportation & storage, and business services sub-sectors.
Manufacturing sector: +3.8% YoY. Supported by continued expansion in production of electrical, electronic & optical products, vegetable and animal oils & fats and food processing products, as well as non-metallic mineral products, basic metal & fabricated metal products.
Construction sector: +11.0 YoY, anchored by sustained expansion across all segments, particularly in non-residential buildings and specialised construction activities.
Agriculture sector: +2.0% YoY. Growth was fuelled by increased production in palm oil, other agriculture and livestock sub-sectors, offsetting the contraction in the rubber sub-sector.
Mining and quarrying sector: -7.4% YoY. The steeper decline was primarily attributed to decline in production of natural gas, as well as crude oil & condensates due to plan closure for maintenance.
Mining and quarrying sector: -7.4% YoY. The steeper decline was primarily attributed to decline in production of natural gas, as well as crude oil & condensates due to plan closure for maintenance.
Domestic demand is expected to remain the key growth driver, underpinned by a healthy labour market and supportive government policy measures.
The continuous improvement in tourism activity and healthy investment pipelines will provide further support to overall momentum.
'Nevertheless, Malaysia's growth prospect faces mounting pressures from an uncertain global environment, as the ongoing US-MY trade negotiations adds uncertainty to the overall trade outlook,' said HLIB.
Downside risks includes a potential deterioration in Malaysia's export competitiveness relative to regional peers due to disproportionate tariff exposure, as well as weaker global consumer sentiment.
In light of these headwinds, we maintain our 2025 GDP growth forecast at 4.0%.
With a stronger-than-expected 2Q25 GDP, we continue to expect Bank Negara Malaysia to keep the overnight policy rate unchanged at 2.75% for the rest of 2025. —July 1, 2025
Main image: Edgeprop
