Malaysia’s GDP was robust at +5.2% YoY in 3Q25 (2Q25: +4.4%), in line with the advance estimate. Growth was lifted by stronger net exports, while domestic demand eased.
The current account surplus widened to 2.4% of GDP (2Q25: 0.1%), driven by a larger goods surplus and a turnaround in services. We have revised our 2025 current account surplus forecast higher to 1.8% of GDP (previously 1.3%).
We see resilience in domestic demand over the medium term, but expect manufacturing and export growth to ease on external headwinds going into 2026.
We maintain our 2025 GDP growth forecast at +4.5%, with growth potentially reaching the upper end of the official forecast range of +4.0-4.8%.
For 2026, we keep our projection at +4.1%, reflecting a more moderate external outlook amid uncertainties surrounding US tariff policy.
3Q25 momentum held up strong
Malaysia’s GDP expanded by +5.2% YoY in 3Q25 (2Q25: +4.4%), in line with the advance GDP estimate. The solid performance came despite concerns that the 19% US tariffs implemented on Malaysian goods beginning August would weigh on external demand. On a seasonally adjusted basis, GDP grew by +2.4% QoQ (2Q25: +2.2%), marking a third consecutive quarter of improving momentum.
Net exports lifted growth as domestic demand eased
On the expenditure side, domestic demand moderated in 3Q25, while net exports provided a lift to growth. Private consumption remained resilient at +5.0% YoY (2Q25: +5.3%), supported by a positive labour market and unemployment at a decade-low of 3.0% in September. Private investment slowed to +7.3% (2Q25: +11.8%) following a moderation in machinery and equipment spending.
On the external front, real exports eased to +1.4% YoY (2Q25: +2.6%), while imports slowed sharply to +0.4% (2Q25: +6.6%), reflecting weaker capital and intermediate goods demand. The import moderation led to a strong rebound in net exports (+17.7%; 2Q25: -72.6%), lifting overall GDP growth in the quarter.
On a sectoral basis, mining rebounded sharply to +9.7% YoY (2Q25: -5.2%) as crude oil and natural gas production recovered post-maintenance. Services remained the main growth anchor at +5.0% (2Q25: +5.1%), supported by resilient wholesale and retail trade. Manufacturing rose to +4.1% (2Q25: +3.7%) on firmer E&E and consumer-related production. Construction sustained double-digit growth at +11.8% (2Q25: +12.1%), albeit at a slower pace,
reflecting ongoing data centre and infrastructure development. However, agriculture eased to +0.4% (2Q25: +2.5%) on weaker palm oil and rubber output.
Current account surplus widened sharply
The current account surplus widened to +RM12.2bn (2Q25: +RM0.3bn), equivalent to 2.4% of GDP (2Q25: 0.1%). The improvement was mainly due to a larger goods surplus (+RM33.3bn; 2Q25: +RM17.0bn). Notably, the services account recorded a turnaround to +RM0.7bn (2Q25:
-RM3.3bn), the first surplus in 14 years, supported by higher travel and construction-related services exports. Meanwhile, the primary income deficit widened to
-RM19.9bn (2Q25: -RM8.9bn). Following the better-than-expected performance, we have revised our full-year 2025 current account surplus forecast higher to 1.8% of GDP (previously 1.3%).
Domestic demand remains the growth anchor
While the sharper-than-expected investment slowdown and stronger net export contribution stood out, the overall trend remains largely consistent with our earlier assessment. Private investment remains in a moderating phase, but its 3Q25 growth of +7.3% is still above the post-pandemic (2021–2024) average of +6.7%, pointing to a healthy normalisation rather than a sharp deterioration.
BNM also noted that only around 20% of committed data centre capacity is currently operational, suggesting room for sustained investment ahead. More importantly, the spillover into higher-value Information and Communications Technology (ICT) services could become new economic growth drivers. These expanded services are better positioned to create higher-paying jobs and support a more resilient private consumption trend over the medium term.
Meanwhile, the moderation in intermediate goods imports may indicate softer export trend ahead. Although BNM has guided that overstocking from the earlier front-loading activity was likely overdone, implying limited risk of a sharp deterioration, we expect manufacturing and export growth to ease as tariff impacts and broader external headwinds become more pronounced going into 2026.
Upside to 2025 forecast; headwinds in 2026
With year-to-date GDP growth at +4.7% YoY, we maintain our 2025 GDP growth forecast at +4.5%. Domestic demand remains resilient, and the external sector should hold up relatively well in the early phase of tariff implementation. As such, risks to the 2025 outlook are tilted to the upside, with growth potentially reaching the upper end of the official forecast range of 4.0-4.8%.
For 2026, we keep our projection at +4.1%, reflecting a more moderate external outlook and a volatile trade environment amid uncertainties surrounding US tariff policy. Overall, domestic demand is expected to remain the key growth driver next year.
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