Malaysia's LI Rose 0.6% In March, Signaling Continued Growth
Malaysia's Leading Index (LI), a key predictor of the country's economic trajectory, rose by 0.6% year-on-year to 112.5 points in March 2025, up from 111.9 a year earlier, according to the Department of Statistics Malaysia (DOSM).
The improvement was driven mainly by strong performances in two indicators: the Number of Housing Units Approved, which surged 27.8%, and Real Imports of Semiconductors, which climbed 22.3%. These gains reflect sustained activity in the construction and electronics sectors — both critical to Malaysia's domestic and export-oriented economy.
However, on a month-on-month basis, the LI posted a marginal decline of 0.04%, influenced by a 0.2% drop in both the Bursa Malaysia Industrial Index and Real Imports of Semiconductors. This suggests near-term volatility in industrial and external trade indicators.
Despite this minor dip, DOSM noted that Malaysia's economy is expected to continue expanding, albeit at a moderate pace, underpinned by sound economic fundamentals and proactive fiscal management. The smoothed long-term trend of the LI remained below the 100.0-point threshold, indicating that while growth is present, it may be slower in the near term.
The Coincident Index (CI), which reflects current economic conditions, also posted a 1.4% year-on-year increase, reaching 126.8 points in March 2025, up from 125.1 a year earlier. This growth was broad-based, driven by gains in almost all CI components, with the exception of Real Contributions to the EPF, which showed a decline.
On a monthly basis, however, the CI eased by 0.2%, attributed primarily to a 0.3% decline in Capacity Utilisation in Manufacturing, signaling a slight pullback in factory activity during the month.
In a positive sign, the Diffusion Index, which measures the breadth of growth across indicators, remained above the 50-point benchmark — suggesting continued expansion momentum. The LI Diffusion Index climbed sharply to 71.4% in March from 28.6% in the prior month, while the CI Diffusion Index held steady at 66.7%.
Overall, while short-term indicators show some volatility, Malaysia's economic outlook remains broadly positive, supported by steady domestic activity and a stable policy environment.
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By contrast the Dow Jones is flat for the year so far having fallen around 16% from its peak in January to lows in April. It has recovered some of its losses, its long-term performance is much better and it is up more than 75% since 2018. Hence, overseas equity markets do offer better returns than local equities. Meanwhile, as the International Monetary Fund has lowered its global growth forecast for this year to 2.8%, Malaysia's real gross domestic product growth forecast for 2025 is expected to be slightly lower than the original forecast of 4.5% to 5.5%. The fund is prepared for this. 'In a more challenging and uncertain market environment, the EPF maintains a dynamic and well-diversified portfolio to help safeguard value and manage downside risks. 'We continue to actively explore investment opportunities across both domestic and international markets to strengthen our portfolio and support long-term, sustainable returns for our members,' Ahmad Zulqarnain concluded. 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