Malaysia’s posts 5.2% GDP growth in Q3, staying on track for upper-end target
Economic expansion is underpinned by sustained domestic demand and stronger net exports, says the country’s chief statistician
[KUALA LUMPUR] Malaysia’s economy expanded by 5.2 per cent in the third quarter of 2025 from the year before, reinforcing Bank Negara Malaysia’s view that the country is on track to achieve the upper end of its full-year growth target, despite persistent global uncertainties.
The final reading – the strongest quarterly performance this year – matches the earlier advance estimate of 5.2 per cent issued by the Department of Statistics Malaysia (DOSM).
Economists polled by Reuters and a preliminary government estimate had also forecast a 5.2 per cent expansion for the July-to-September period. This follows year-on-year growth of 4.4 per cent in both the first and second quarters.
At a media briefing on Friday (Nov 14), DOSM chief statistician Mohd Uzir Mahidin said the pickup was underpinned by sustained domestic demand and stronger net exports.
Household spending was supported by firm labour-market conditions, income-related policy measures and ongoing cash-assistance programmes, while investment activity was lifted by continued capital expansion across both private and public sectors.
On the external front, he cautioned that export growth would continue to face headwinds from tariffs and soft global demand.
“However, growth would be supported by continued demand for electric and electronic goods, inbound tourism and the recovery in mining-related exports,” he said.
On track to achieve high growth for 2025
For the first nine months of the year, the economy expanded by 4.7 per cent.
Bank Negara governor Abdul Rasheed Ghaffour said full-year growth remains on track to reach the upper end of the central bank’s forecast range of 4 to 4.8 per cent.
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“Looking ahead, global economic conditions will remain challenging, and we need to keep strengthening our economic buffers to weather any headwinds that may come our way,” he said.
He added that the outlook carries “both upside and downside risk”, though tourism recovery and higher demand for electrical and electronic products are expected to provide further support.
The central bank’s 2025 growth projection is slower than last year’s 5.1 per cent expansion, reflecting the impact of trade disruptions stemming from US tariffs.
Rate cuts?
Bank Negara held its benchmark interest rate at 2.75 per cent at its meeting last week, after cutting rates for the first time in five years in July, citing easing trade uncertainties.
On the market forecast for potential rate cuts, Abdul Rasheed said current monetary policy levels remain appropriate and supportive of the economy, but there is “still space to take action” based on the prevailing outlook for growth and inflation.
Among the sectors, services and manufacturing reported stronger year-on-year growth in the third quarter than in the previous quarter.
Services, which account for more than half of Malaysia’s economic output, rose 5 per cent; manufacturing expanded 4.1 per cent.
Construction continued to register double-digit growth, rising 11.8 per cent. The mining and quarrying sector rebounded sharply, posting 9.7 per cent growth after having contracted 5.2 per cent in the previous quarter; this came from increased crude-oil and natural-gas output following scheduled maintenance work.
Inflation remain stable
Headline inflation remained stable at 1.3 per cent in the third quarter, while core inflation rose to 2 per cent.
Abdul Rasheed said higher core inflation added some impetus to headline prices, but this was offset by declines in selected administered items.
He expects inflation to remain moderate in 2025, with headline inflation projected to average between 1.5 and 2.3 per cent.
Both headline and core inflation are expected to stay contained for the rest of the year, supported by steady domestic demand, easing global cost pressures and government measures to cushion the impact of domestic policy reforms.
Inflation is projected to remain moderate heading into 2026, backed by stable labour-market conditions and favourable supply dynamics, he added.
Ringgit strengthening
Malaysia’s currency was broadly stable in the third quarter, having appreciated around 0.1 per cent against the US dollar as at end-September. On a nominal effective exchange-rate basis, the ringgit strengthened 0.8 per cent.
As at noon on Friday, the ringgit was trading at 4.1321 to the US dollar, nearly 8 per cent stronger than 4.4715 at the start of the year. Against the Singapore dollar, it appreciated almost 3 per cent to 3.1789 from RM3.2742 on Jan 1.
Abdul Rasheed said recent currency movements were driven by both external and domestic factors.
The US Federal Reserve’s rate cuts in September and expectations of further easing supported the ringgit, while recent trade agreements between the US and several partners, including Malaysia, eased tariff-related uncertainties and lifted sentiment, he added.
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