Malaysia’s growth beats all estimates despite Trump tariffs
Its latest GDP print puts it on track to meet the official forecast of 4% to 4.8% expansion this year
MALAYSIA’s growth unexpectedly accelerated in the third quarter, with the economy firing in all sectors and its exports defying US President Donald Trump’s higher tariffs.
Gross domestic product rose 5.2 per cent in the July-September period from the year before, according to advance estimates from Malaysia’s Department of Statistics on Friday (Oct 17). This growth was faster than even the highest estimate in a Bloomberg survey, and exceeded the pace of expansion in the previous three quarters.
“Domestic demand continued to be the primary engine of growth, particularly in tourism-related activities during public and school holidays,” Malaysia’s chief statistician Mohd Uzir Mahidin said in a statement, noting that activity was supported by cash disbursements and an interest rate cut.
Sustained capital investment and rising external demand bolstered the expansion, despite uncertain trade policies, he added.
The ringgit held small gains against the US dollar after the data. The FTSE Bursa Malaysia KLCI gauge maintained losses of as much as 0.3 per cent.
Trump’s global trade war has so far failed to derail South-east Asia’s economies, though they are facing some of the highest tariff rates.
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Vietnam’s 8.23 per cent growth was the fastest expansion since 2022, as factories went into overdrive shipping goods to the US before the levies hit in early August.
And while Singapore’s Q3 growth slowed to 2.9 per cent from the year before, it still beat analyst expectations.
The Philippines, Thailand and Indonesia are set to unveil their Q3 figures next month.
Malaysia’s trade numbers for September offer a snapshot of the muted impact of the 19 per cent levy on shipments to the US.
Exports grew 12.2 per cent, beating the highest estimate in a Bloomberg survey, while imports rebounded by 7.3 per cent, bringing the trade surplus to RM19.9 billion (S$6.1 billion), according to data also released on Friday.
Export growth in September was recorded in all sectors, said Malaysia’s Investment, Trade and Industry Ministry.
Mohd Afzanizam Abdul Rashid, the chief economist at Bank Muamalat Malaysia, said: “The Malaysian economy is cruising at a respectable speed.
“Going forward, the impact from the US tariffs will be closely monitored. Our sense is that the central bank and the fiscal authority will remain vigilant in observing the incoming data, and would respond accordingly.”
Malaysia’s latest GDP print puts it on track to meet the official forecast of 4 to 4.8 per cent growth this year.
The country is counting on resilient domestic demand to provide a buffer as Trump’s levies threaten exports. Growth is expected to moderate next year to a range of 4 to 4.5 per cent on the back of external volatility, said the government.
“Malaysia’s economy accelerated in the third quarter, but we expect growth to soften in the coming quarters, which, alongside low inflation, should add to the case for further monetary easing this year,” Shivaan Tandon, an analyst with Capital Economics, wrote in a note.
Exports to the US jumped 24.4 per cent in September on account of robust exports of electrical and electronic products, said the Investment, Trade and Industry Ministry. Shipments to China gained 2.9 per cent.
In terms of broad economic activity, the mining and quarrying sector jumped 10.9 per cent in Q3, after having contracted 5.2 per cent in the April-June period, said the statistics department. This was mainly driven by higher production of natural gas and crude oil and condensate.
Manufacturing growth rose 4 per cent, from 3.7 per cent in the previous three months, driven by electrical, electronic and optical products as well as vegetable and animal oils and fats and food processing, the government agency said.
The construction sector continued to moderate, expanding 11.2 per cent in Q3; the services sector grew 5.1 per cent, matching the previous quarter’s pace.
The central bank cut interest rates in July by a quarter point to pre-emptively support the economy, warning that “the balance of risks to the growth outlook remains tilted to the downside”. It also released more funds into the banking system to encourage lending and boost activity.
The reduction in borrowing costs and the government’s one-off cash assistance of RM100 played a supportive role in stimulating domestic consumption, said Uzir.
“At the current juncture, monetary policy stance looks supportive and the Budget 2026 approach will continue to provide support for the economy,” Afzanizam said, adding that the central bank would likely maintain the interest rate at 2.75 per cent for now. BLOOMBERG
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