Growth likely at 4.3% in the second quarter
KUALA LUMPUR: Malaysia's gross domestic product (GDP) growth for the second quarter of this year (2Q25) is projected to hit 4.3%, driven by the agriculture sector's recovery, and expansion in the services, manufacturing and construction sectors, says Hong Leong Investment Bank Research (HLIB Research).
The projection is slightly below the Statistics Department's advance estimate and consensus median forecast of 4.5%.
HLIB Research said on the demand side, growth is anticipated to be primarily led by private consumption, and volatile import duties are likely to contribute positively to GDP.
'For now, we maintain our GDP growth forecast for this year at 4%, pending the release of the full 2Q25 GDP print on Aug 15,' the research house said yesterday.
It said growth will be anchored by resilient domestic demand, steady employment and wage gains, and supportive fiscal measures, including a one-off RM100 cash transfer for all adults to be used from Aug 31 to Dec 31.
Assuming that the entire amount of the cash transfer is spent, HLIB Research estimates that a total of RM2bil in spending would raise private consumption by 0.2 percentage points.
'Nevertheless, downside risks to growth persist, stemming from global trade headwinds and policy uncertainty,' it said.
Meanwhile, Maybank Investment Bank Research also predicted Malaysia's GDP in 2Q25 to be at 4.3%, reflecting slower growth in the services and construction sectors, firmer performances from the manufacturing and agriculture sectors, and smaller contraction in the mining sector. — Bernama
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
4 hours ago
- New Straits Times
Bank Negara seen holding GDP target despite softer second half
Faiqah Kamaruddin KUALA LUMPUR: Bank Negara Malaysia is expected to keep its full-year gross domestic product (GDP) target intact despite an anticipated slowdown in the second half of the year, economists said. They pointed to robust services and construction activity, which are likely to anchor growth in the July–December period and offset softer manufacturing and weaker mining output. The central bank, together with the Department of Statistics Malaysia (DOSM), will release the second-quarter (Q2) 2025 GDP data tomorrow. Socio Economic Research Centre (SERC) executive director Lee Heng Guie said the country's Q2 GDP is likely to come in close to DOSM's advance estimate of 4.5 per cent, possibly around 4.4 per cent, supported mainly by services and construction. "We're already seeing some slowdown in manufacturing, while mining is contracting more sharply due to weaker gas and petroleum output. "Services are still holding up at around five per cent, supported mainly by restaurants, transport, storage, communication, real estate and business services," he told Business Times. Lee said construction is expected to post double-digit growth, albeit slightly lower than in the first quarter. Looking ahead, he cautioned that exports will likely remain a drag on the economy amid the newly implemented 19 per cent tariff, ongoing United States-China trade tensions and slowing global demand. "There's a lot of uncertainty, particularly over China's final tariff outcome. This could intensify competition pressures for Asean exporters to the US market," he said, adding that May and June exports had already declined as front-loading activities tapered off. He noted that weaker US consumer spending would directly impact Malaysia's exports, though domestic consumption should stay resilient, aided by the government's RM100 cash handout to all citizens at the end of August, worth RM2.2 billion. Lee maintained his full-year GDP forecast at four per cent, implying a slower second half. "If there is an upside surprise, GDP could still fall within the 4 to 4.5 per cent range, but 4.5 per cent would be a stretch, more likely around 4.1 to 4.3 per cent," he said. Lee added that Bank Negara's recent 25-basis-point cut in the Overnight Policy Rate (OPR) was a pre-emptive move to prevent growth from slipping below four per cent, and he does not expect further cuts this year. OCBC senior Asean economist Lavanya Venkateswaran also expects Bank Negara to maintain its four to 4.8 per cent GDP growth target when releasing the second quarter figures, though she sees growth slowing to 3.5 per cent on a yearly basis in the second half from 4.4 per cent in the first half. "The impact of export front-loading to the US will fade, and uncertainty will hinder investment plans," she said. Lavanya added that recession risks remain low as domestic conditions are supported by strong labour markets and ongoing reform efforts. OCBC is pencilling in another 25-basis-point rate cut in the second half on expectations of a sharper slowdown, though Lavanya noted that if the deceleration is delayed into early 2026, the cut could be pushed into the first half of that year.
The Star
5 hours ago
- The Star
2Q GDP growth likely to miss estimates
PETALING JAYA: Gross domestic product (GDP) growth for the second quarter (2Q) is anticipated to come in slightly below the Statistics Department's advanced estimates of 4.5%, mainly dragged by challenges on the exports front. According to economists surveyed, domestic demand is poised to hold up with some government support and the recent overnight policy rate (OPR) cut amidst the more difficult external environment with uncertainties to international trade flows. While US tariffs with Malaysia and the Asean region have already been set, there are still other upside risks factors to the tariff rate especially, for Malaysia. Factors here include its close association with the BRICS partnership and the announced intent to migrate the semiconductor supply chain to the United States, to which US president Donald Trump had earlier plainly and clearly stated. Chief Economist at Ambank Group, Firdaos Rosli, said its initial projections for the 2Q GDP growth were initially in line with advance estimates of 4.5% but considering latest developments, this has been lowered to 4.3%. 'This is due to data points for the services sector, construction and trade – we think that growth will come in a bit lower than advanced estimates. 'We notice there has been resilient spending that continues to drive growth but the front loading effects due to US tariffs are starting to take the bite now. 'Front loading effects had dissipated quite drastically whereby in May and June the exports growth had recorded a contraction – this might continue in the coming months,' he told StarBiz. On the domestic front, Firdaos said demand is still holding up with loans growth relatively stable although there is some moderation in terms of loan applications. 'But loans growth among the small and medium enterprises (SMEs) are still high which indicates that the business community is still confident with the business environment in Malaysia relative to external challenges at the moment. 'We think domestic demand will still be resilient on government support and handouts such as the Program Sumbangan Tunai Rahmah and the RM100 cash assistance for all,' he noted. While there are some signs of moderation in the domestic front, this is anticipated to still hold up for now and is also supported by the lower OPR. 'The United States economy in the first half of this year has moderated and this has a strong correlation to Malaysia. 'As the US slows, so will Malaysia and this will probably feed in to the narrative in to the third and fourth quarter of this year. We are still holding on to full year GDP growth of 3.8%,' Firdaos said. 'It appears that 1Q will probably be the best performing quarter of this year, based on the present circumstances. 'Bank Negara Malaysia's projection is for GDP growth to be at 4% to 8%. If growth is 4.3% in 2Q that means growth in the second half will have to be at least higher than 3.6%,' he added. Socio-Economic Research Centre executive director and economist Lee Heng Guie said he anticipates 2Q GDP growth to come in at 4.4%, lower than advanced estimates. He said some key points that will influence this figure include the manufacturing sector which has slowed down, while mining continues to decline but the construction industry is still holding up with double digits growth. Meanwhile, Lee said the services sector is also being buoyed by growing tourism activities and their spending receipts as well. 'In the second half we will be watching the exports sector – due to the ongoing uncertainties from tariffs and I believe the actual impact due to the tariffs will be in 3Q. 'Exports will continue to be a drag unless it's a surprise, which is unlikely. The second half's GDP growth will hopefully come in at 3% to 4%. 'For the full year GDP forecast, I'm expecting it to be at 4%,' Lee told StarBiz. Bank Negara Malaysia had last month revised its GDP estimates lower and Lee says this could be why the OPR was preemptively cut. 'Next year, there will be the impact of the still delayed tariff between US and China and this effect will continue into the first half of next year. 'This is why it is crucial for the government to ensure that Budget 2026 will continue to hold up domestic demand spending as there are building risks in the exports sector,' Lee said. On Tuesday, the United States and China extended their tariff truce for another 90 days, which if they did not, would have resulted in triple-digit percentage duties that would have been imposed on each other's goods. 'The government should keep costs manageable for businesses – hopefully the soon-to-be-announced budget will give some tax concessions to ease the cost of doing business especially for the SMEs. 'Sentiment here for the second half will be cautious at best,' he added. Meanwhile, BIMB Securities Research anticipates GDP was likely to have expanded by 4.3% for the 2Q compared to 4.4% in 1Q. 'Demand-side indicators in 2Q were rather mixed. Private consumption, the key growth driver, is expected to have moderated, with retail sales growth easing to 5% from 6.8% in 1Q, the slowest pace in six quarters. 'The Index of Services also softened slightly to 5% from 5.2% in the previous quarter. Despite this moderation, labour market conditions remained firm, with the unemployment rate edging down to 3%, the lowest since April 2015,' BIMB Research said. It noted the absence of major festivals during the quarter, which when combined with fading effects from February's minimum wage hike and the civil servant salary adjustment, would have likely tempered consumption growth.
Focus Malaysia
20 hours ago
- Focus Malaysia
RMK13's vision meets the streets of Bukit Bintang: Delivering dignity through action
THE launch of the 13th Malaysia Plan (RMK13) by Prime Minister Datuk Seri Anwar Ibrahim recently marked a significant milestone in our national development journey. With its strong emphasis on equitable growth, resilience and social wellbeing, RMK13 charts a bold path forward, not just for rural communities and industrial zones, but also for high-density urban centres like Bukit Bintang where I have been active in community work over the past decade. RMK13 sets out to uplift the quality and dignity of life for all Malaysians, promising to lift the baseline and the quality of life for the people and to build a decent standard of living. As a local community activist, I view this plan as an important opportunity to bring lasting improvements to those often overlooked in the shadows of city skylines. Everyday concerns in the city In Bukit Bintang, the concerns are familiar: affordable housing, accessible healthcare, quality education and the rising cost of living. While RMK13 allocates RM40 bil for health and RM67 bil for education, the key question is how to ensure that every ringgit reaches the people who need it most. For example, public clinic congestion remains a challenge, especially for senior citizens. Families with school-going children often feel compelled to spend on tuition just to keep up. And even basic expenses—from groceries to childcare—have steadily crept up for those living in high-cost districts. Under RMK13 the commitment towards an inclusive and responsive development is crystal clear. What matters now is making sure the delivery mechanisms match the lived realities of people in the city. Making the unseen visible One area where we must continue improving is how we identify those most in need. In the city, poverty and hardship do not always look like they do in rural districts. In places like Besut or Bagan Serai, RM100 can be stretched much farther than in Bukit Bintang, which lies at the heart of Malaysia's capital. Beneath the neon lights of Bukit Bintang, poverty persists in ways not often obvious. Around the Central Market, Medan Pasar, and even near the Jalan Sultan Ismail-Jalan Bukit Bintang junction, homeless individuals can be found sleeping on the streets. Single mothers are also found in pockets of the city where lower-income families reside, such as the Hang Tuah Public Housing flats and the Salak South People's Housing Project (PPR). As for the hardcore poor, while the numbers are relatively low in Bukit Bintang, even a single household is one too many. Some are found in the Blue Boy Mansion and Selangor Mansion, whose names may evoke grandeur but in reality house many low-income residents. RMK13 rightly reminds us that GDP growth means little if people's freedoms and dignity are still shackled by hunger, injustice or exclusion. As someone who lives and serves in Bukit Bintang, I see that reality every day. Walking the talk in Bukit Bintang While RMK13 outlines a national framework, real impact comes from local leadership stepping up to meet immediate needs. For years, my team and I have been actively serving on the ground in Bukit Bintang to safeguard the welfare of our community. For example, through the Jualan Rahmah initiative led by the Domestic Trade and Costs of Living Ministry (KPDN), we work closely to bring affordable grocery sales to the heart of the city. Our role includes identifying suitable sites, assisting with crowd control and registration on the day, and verifying that participants are Malaysian. In addition, we distributed 99 Speedmart vouchers worth RM100 each to around 2,000 elderly residents and households in need. These help them cope with rising costs and manage their daily expenses. We also support residents who often fall through the cracks of national assistance schemes such as Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA). Many walk into the Federal Territories Residents' Representative Council office to check their eligibility or request help with registration. To make access even easier, we now invite the Welfare Department and the Inland Revenue Board to set up booths during certain community programmes so that residents can check, clarify and register on the spot. These may not be grand initiatives, but they deliver meaningful help to those who need it. By connecting national policy with local action, we help ensure that no one is left behind. Looking ahead RMK13 is not just a document of targets and budgets. It is, in many ways, a moral and social obligation. It reminds us that, to quote PM's address when tabling RMK13, 'justice is not merely a moral principle but a social instrument that unites society'. I believe Bukit Bintang reflects both the promise and the challenges of urban Malaysia. It is not perfect, but it is real. The needs here are immediate, and the solutions must be practical and close to the ground. RMK13 has set the right course. It is our responsibility to ensure that its aspirations translate into everyday improvements for the people—from dwellers of the Jalan Hang Tuah Public Housing flats and traders along Jalan Tuanku Abdul Rahman, to students in Victoria Institution and senior citizens living near the famous Jalan Kenanga. Even small wins in a place like Bukit Bintang can go a long way in showing how RMK13 can work where it matters most. ‒ Aug 13, 2025 Ben Fong Kok Seng is the Chairperson of the Bukit Bintang Parliamentary Zone, Federal Territories Residents' Representative Council. The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia. Main image: Expedia Malaysia
