Steady 2Q25 GDP growth signals domestic resilience, momentum could continue in 2H

The Star

7 hours ago

KUALA LUMPUR: Malaysia's economy continues to remain resilient despite an increasingly uncertain global trade policy backdrop, economists said today.
Their remarks came after Bank Negara Malaysia (BNM) announced that the gross domestic product (GDP) expanded by 4.4 per cent in the second quarter of this year (2Q 2025), reaffirming that the economy remains strong.
UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research Mohd Sedek Jantan said projects under the 13th Malaysia Plan (13MP), along with infrastructure investments and an anticipated reduction in interest rates by the United States Federal Reserve (Fed), are likely to support the ongoing expansion of the domestic economy.
There was also some relief for Malaysia as the US trade policy stance has eased compared to the pressures faced in 2Q, he said.
The latest figures not only demonstrate Malaysia's resilience but also reflect that GDP growth for 3Q and 4Q could be sustained.
"We maintain our forecast for year-on-year growth at approximately 4.5 per cent in both quarters, underpinned by firm domestic demand and ongoing investment momentum.
"The full-year GDP was also projected at 4.5 per cent,' Mohd Sedek told Bernama, adding that catalysts arise from both internal and external factors.
Domestically, the implementation of the 13MP will expedite structural reforms and infrastructure investments, he said.
Externally, Mohd Sedek noted that there are expectations that the Fed will lower interest rates by at least 50 basis points, which could enhance capital inflows, improve liquidity, and support the value of the ringgit.
Earlier this month, the US imposed a reduced tariff of 19 per cent on Malaysian imports, effective Aug 1, 2025. The revised reciprocal rate is lower than the initially scheduled 25 per cent.
Meanwhile, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the Malaysian economy was able to sustain itself at 4.4 per cent in 2Q, albeit slower compared to the advance estimates of 4.5 per cent.
"We have seen net exports were the main drag to the overall growth, where it fell 72.6 per cent, while domestic demand continues to remain resilient, especially consumption and investment in the private sector,' he said.
Going forward, Mohd Afzanizam expects the Malaysian economy to grow at a slower pace in the second half of 2025 (2H 2025), possibly in the region of 3.7 per cent to 3.8 per cent, which could give the full year growth of 4.1 per cent.
"Thus far, BNM has been proactive in managing the country's monetary policy, whereby the Statutory Reserve Requirement (SRR) was reduced by 100 basis points in May and the overnight policy rate (OPR) was cut by 25 basis points in July.
"The additional allocation for Sumbangan Tunai Rahmah (STR) of RM2 billion would also help to promote higher domestic demand, which can provide an offset to the looming risks of slower global growth in 2H 2025,' he said.
BNM announced that the Malaysian economy expanded by 4.4 per cent in 2Q 2025, maintaining the same growth rate recorded in the 1Q 2025. In 2Q 2024, the country's economy expanded by 5.9 per cent.
The expansion for 2Q was driven by robust domestic demand.
Household spending increased, alongside a stronger expansion in both private and public investments, despite slower export growth primarily due to a decline in commodities-related exports.
BNM governor Datuk Seri Abdul Rasheed Ghaffour had said that the external environment remains challenging, with uncertainty surrounding the tariffs imposed by the US continuing to linger, and the impact will take time to materialise fully. - Bernama