Kuala lumpur: Research firms have raised Malaysia's 2025 gross domestic product (GDP) growth forecast to 4.2 per cent and 4.3 per cent following its expansion by 4.4 per cent in the second quarter of 2025 (2Q 2025).
According to BERNAMA News Agency, in a research note, MBSB Investment Bank Bhd adjusted its 2025 GDP growth projection to 4.3 per cent from 4.0 per cent previously, considering that the 2Q 2025 GDP is slightly lower than the advance estimate, while the first half of 2025 (1H 2025) growth is still better than its earlier estimate.
MBSB noted that while commodity exports have declined, external trade has shown resilience due to front-loading effects and an improvement in re-exports. However, it cautioned that higher tariffs could affect external demand, particularly from the United States.
The investment bank also anticipated more support for the 2H 2025 growth from the pre-emptive overnight policy rate cut and additional fiscal measures announced last month. It highlighted the downside risks from external uncertainties, weaker demand from major markets, and potential higher price pressures from policy changes. Despite a deal with the US, the trade outlook remains uncertain due to potential tariffs on the semiconductor industry, which is significant for Malaysia's trade with the US.
Meanwhile, in a separate note, Maybank Investment Bank Bhd raised its 2025 real GDP growth forecast slightly to 4.2 per cent from 4.1 per cent, given the 1H 2025 growth of 4.4 per cent and the resilient 2Q 2025 growth. The investment bank also adjusted the 2026 growth forecast to 4.1 per cent from 4.2 per cent following the change to the 2025 forecast.
Maybank emphasized that 'domestic tailwinds versus external headwinds' remains the narrative on growth dynamics. External growth headwinds persist despite the clarity on US reciprocal tariffs, with the final rate of 19 per cent for Malaysia, due to uncertainties on product-specific tariffs, especially on semiconductors.
The bank highlighted that semiconductors are Malaysia's major exports to the US and are currently exempted from the reciprocal tariff. It noted positive domestic tailwinds such as consumer spending supported by income growth, favorable job market conditions, income-lifting measures, the 25 basis points OPR cut by Bank Negara Malaysia, and additional consumer-friendly measures announced in July 2025.
Maybank stated that the investment upcycle is sustained by robust approved private investment since 2021, domestic direct investment by government-linked investment companies, progress in major infrastructure projects, and strategic initiatives like the Johor-Singapore Special Economic Zone.
Last Friday, Bank Negara Malaysia announced that the Malaysian economy expanded by 4.4 per cent in 2Q 2025, equivalent to the 4.4 per cent growth in 1H 2025, driven by robust domestic demand and higher household spending.