KUALA LUMPUR, May 16 (Xinhua) -- The Malaysian economy expanded by 4.4 percent year-on-year in the first quarter of 2025, driven by the steady expansion in domestic demand, the central bank said Friday.
Bank Negara Malaysia (BNM) said in a statement that household spending remained resilient amid positive labor market conditions and income policies, while investment grew steadily with ongoing project realization.
In the external sector, Malaysia's export growth was slower due mainly to lower mining exports. This was partially offset by stronger electrical and electronics (E&E) exports and tourism activity.
On a quarter-on-quarter, seasonally-adjusted basis, the growth expanded by 0.7 percent.
According to the bank, growth in 2025 is expected to be slightly lower than the earlier forecast range, affected by the escalation in trade tensions and the heightened policy uncertainties.
The rapidly evolving developments surrounding trade tariffs are expected to affect the global outlook for the rest of the year, said the bank.
"As a small and open economy, Malaysia will inevitably face both direct and indirect impacts from these tariffs. Growth of the Malaysian economy is expected to be slightly lower than the earlier forecast of 4.5 percent to 5.5 percent in 2025," said Abdul Rasheed Ghaffour, the bank's governor.
According to him, the high uncertainty surrounding outcomes of trade negotiations and how these will reshape global trade complicates a clear assessment of their impact on growth at this juncture.
"The new official growth forecast will be released in the near future once there is greater visibility in these factors," the central banker added.
Notwithstanding the external risks, growth will continue to be anchored primarily by resilient domestic demand, said the bank, adding that this provides a strong buffer against external headwinds.
According to the bank, household spending is expected to continue expanding, supported by continued wage and employment growth, particularly within domestic-oriented sectors, as well as income-related policy measures.
It also noted that investment activities will be driven by the continued implementation of multi-year projects across private and public sectors, further realization of approved investments with a larger share by domestic players and the implementation of catalytic initiatives under the national master plans.
Additionally, the continued demand for E&E goods, alongside higher tourist receipts, will also provide a cushion to growth, it added. ■
