Malaysia’s economy expanded steadily in the second quarter as robust domestic demand, its main engine of growth, cushioned deceleration in exports, official data showed.
Gross domestic product rose 4.4% in the second quarter from a year earlier, according to the Department of Statistics Malaysia. The rate of expansion, however, was a shade lower than the official advance estimate of 4.5% growth. In the first quarter, the economy grew 4.4% year-on-year as well.
On a seasonally-adjusted basis, economic growth accelerated to 2.1% quarter-on-quarter from 0.7% in the first three months of 2025.
“Uncertainty surrounding tariffs continues to linger and the impact will take time to fully materialise,” said Bank Negara Malaysia (BNM) governor Datuk Seri Abdul Rasheed Ghaffour. “Nonetheless, Malaysia is facing these challenges from a position of strength.”
While there is some certainty following the August US tariff announcement, “we are operating in a different environment” where forecasting is challenging, he said at a news conference. Nevertheless, the existing assumption of 4%-4.8% is “broad enough” to capture the uncertainties, he noted.
The US has slapped a 19% import tariff on Malaysian goods as part of sweeping reciprocal tariffs against its major trading partners. President Donald Trump earlier this month threatened a 100% tariff on imported semiconductors, which makes up about one-third of Malaysia’s exports to the US.
The additional 9% reciprocal tariff against Malaysia — on top of a blanket 10% imposed since April — is within BNM’s estimation, Abdul Rasheed said. However, the tariff on semiconductors is a wild card and will be closely watched, he said.
The demand side of the economy picked up in the second quarter, with private consumption rising to 5.3% while private investment also accelerated to 11.8%. Public consumption gained 6.4% while public investment advanced to 13.6%.
Supporting growth in the second quarter was tourism activities though exports, led by electrical and electronics, showed signs of tapering off towards the end of the second quarter, Abdul Rasheed noted.
Net exports fell sharply by 73% as imports rose while exports grew at much slower pace in the second quarter.
On the supply side, the services sector expanded 5.1% in the second quarter and a tad slower than the first quarter. Growth of the key manufacturing sector however eased to 3.7% and the rise in the construction sector also moderated to 12.1%.
Agricultural activity growth was slightly faster at 2.1% though mining and quarrying contracted at steeper rate of 5.2%.
Source: theedgemalaysia