Malaysia’s growth unexpectedly quickens in Q2 despite trade risks
Gross domestic product rose 4.5% in the April-June period from a year earlier
[KUALA LUMPUR] Malaysia’s economy grew faster than expected in the second quarter, driven by the services sector, even as the country contends with US President Donald Trump’s rollout of global tariffs.
Gross domestic product rose 4.5 per cent in the April-June period from a year earlier, according to advance estimates from the Department of Statistics Malaysia. That’s higher than the 4.2 per cent median estimate in a Bloomberg survey, and faster than the 4.4 per cent expansion in the first three months of the year.
The latest economic print may give breathing space to policymakers as they review their 4.5 to 5.5 per cent growth projection for 2025. Malaysia has been threatened with a 25 per cent US import levy and officials are racing to negotiate the tariff lower before they take effect on Aug 1.
Exports unexpectedly declined 3.5 per cent in June from a year earlier, the statistics agency said in a separate statement. Analysts’ median estimate was for an increase of 5.4 per cent, according to a Bloomberg survey. Imports rose 1.2 per cent, while total trade fell by 1.2 per cent.
The data suggests that the effects of frontloading of shipments to the US are wearing off, according to Lavanya Venkateswaran, analyst at OCBC.
“Overall, we see the incoming data as mixed, suggesting weakening external demand amid better domestic demand conditions,” she said. She maintained an annual GDP forecast of 3.9 per cent growth, and expects another 25-basis-point cut in interest rates by the central bank this year.
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The central bank last week cut interest rates 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”.
Manufacturing growth slowed to 3.8 per cent in the second quarter, from 4.1 per cent in the first three months of the year, according to the statistics department.
Growth in the services sector accelerated to 5.3 per cent, from 5 per cent in the previous three months, with key contributions from wholesale and retail trade, along with transportation and storage businesses. Malaysia’s economy is estimated to have expanded by 4.4 per cent in the first half of 2025, the government agency said.
The construction sector moderated, but still saw an 11 per cent expansion, the sixth straight double-digit quarterly increase.
The advance GDP estimates are based on available information from April and May, along with estimates. Preliminary GDP data, which will provide a detailed analysis of the second quarter, will be released on Aug 15.
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