By Rozanna Latiff
KUALA LUMPUR (Reuters) – Malaysia’s economy expanded at its fastest pace in a year in the third quarter, with 2025 growth slated to register in the upper end of Bank Negara Malaysia’s (BNM) forecast, the central bank said on Friday.
Gross domestic product rose 5.2% in the July-to-September period, data from BNM and the Department of Statistics showed, in line with projections by economists polled by Reuters as well as a preliminary government estimate. The economy had expanded 4.4% in the first two quarters of the year.
GDP rose 2.4% on a quarter-on-quarter seasonally adjusted basis, gaining pace slightly from the 2.2% growth recorded in the previous three months.
Over the first nine months of the year as a whole, the economy grew by 4.7%, well within the central bank’s forecast range of between 4% and 4.8% for 2025, BNM Governor Abdul Rasheed Ghaffour told a press conference.
“At this rate for 2025, we may record a growth rate that is closer to the upper range of this forecast,” he said.
BNM SEES ROOM FOR RATE ADJUSTMENT
Growth was driven by sustained domestic demand and a sharp recovery in exports, with net exports rising 17.7% from a year earlier in the third quarter, official data showed, despite trade disruptions arising from U.S. tariffs on Malaysian goods.
The United States in August imposed a 19% tariff on imports from Malaysia, though some goods are exempt following a trade deal signed between the two countries last month.
Abdul Rasheed flagged continuing risks arising from tariff and trade uncertainties, but said the economy was expected to benefit from a recovery in tourism and higher demand for the country’s electrical and electronic goods.
The economy is expected to expand between 4% and 4.5% next year, driven by domestic demand and sustained investments, Abdul Rasheed said, slowing from the projections for this year and growth of 5.1% in 2024.
Last week, BNM maintained its benchmark interest rate at 2.75%, after cutting rates for the first time in five years in July, citing easing trade uncertainties.
Asked whether another rate cut was on the cards, Abdul Rasheed said the current monetary policy levels were appropriate and supportive of the economy, but there was “still space to take action” given the present outlook for growth and inflation.
Inflation was projected to remain moderate this year. Consumer prices in September rose 1.5% from a year earlier, accelerating slightly after slowing to a four-year low of 1.1% in June.
Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia, said the data indicated that growth in the final quarter of the year could be “in the region of 5%”.
“Additionally, expansionary fiscal policies and government assistance, such as cash transfers and subsidies that have become more targeted should provide the right cushion from the external uncertainties,” he said.
(Reporting by Rozanna Latiff; Editing by David Stanway and Tom Hogue)
