KUALA LUMPUR, May 16, 2025 — Malaysia's economy expanded by 4.4% year-on-year in the first quarter of 2025, a slowdown from the revised 4.9% growth in the previous quarter and slightly below economists' forecasts of a 4.5% rise. The central bank attributes the Q1 growth to strong household spending supported by favorable labor markets, government policies, steady investment, and continued export performance. However, the growth momentum was dampened by reduced oil and gas output and a return to normal levels in motor vehicle sales and production.Â
On a seasonally adjusted quarterly basis, GDP rose 0.7%, reversing a 0.2% contraction in the previous quarter. Bank Negara Malaysia Governor Abdul Rasheed Ghaffour warned of a weaker outlook due to global trade tensions and expected reduced consumer spending and investment, noting that the year's economic growth may fall below the projected 4.5%-5.5% range. The central bank plans to revise the forecast within the next couple of months.Â
Prime Minister Anwar Ibrahim acknowledged that while the delay in U.S. tariffs provides temporary relief, Malaysia may not meet its annual growth target, especially with a 24% tariff on exports to the U.S. looming from July unless negotiating terms improve.Â
Despite the challenges, the central bank remains committed to supporting economic growth through appropriate monetary policies and structural reforms aimed at enhancing resilience and competitiveness.
