RESEARCH FIRMS RAISE MALAYSIA’S 1Q 2025 GDP FORECAST TO 4.5-4.6 PCT

KUALA LUMPUR, May 14 (Bernama) -- Research firms have projected a higher gross domestic product (GDP) of between 4.5 and 4.6 per cent from 4.4 per cent previously for the first quarter of 2025 (1Q 2025), ahead of this Friday’s announcement.

According to Maybank Investment Bank Bhd, this is premised on “slightly faster growth” for the services sector of 5.3 per cent year-on-year (y-o-y) versus 5.2 per cent and agriculture (0.8 per cent y-o-y).

“Smaller contraction in mining sector is projected at -3.2 per cent y-o-y, slower expansion in construction (13.9 per cent) and manufacturing (4.2 per cent),” it said in a research note.

Meanwhile, Hong Leong Investment Bank Bhd (HLIB) also revised up its 1Q 2025 GDP growth estimate to 4.5 per cent y-o-y, above Statistics Department Malaysia’s advance estimate of 4.4 per cent y-o-y, supported by sustained, albeit moderating, expansion in the services, manufacturing and construction sectors.

It also maintained expectations for Malaysia’s economic growth to moderate to +4.0 per cent y-o-y in 2025 on the back of sustained domestic demand, supported by employment and wage gains, further bolstered by supportive fiscal policy measures.

“While the US has initiated a pause on tariff rates on its trading partners, including Malaysia and China, the higher tariff rates compared to last year and the fluidity of trade policy could make businesses adopt a more cautious stance towards major investment and hiring plans,” it said.

Echoing HLIB, CIMB Investment Bank Bhd said the estimated 4.5 per cent in the 1Q 2025 GDP growth is expected to be driven by a slower pace of construction at 16.6 per cent y-o-y compared to the 23.1 per cent in 4Q 2024 and easing industrial output (2.3 per cent versus 3.4 per cent in 4Q 2024)

“Quarterly growth in distributive trade volumes held steady at 4.3 per cent y-o-y in 1Q 2025 (4Q 2024: 4.4 per cent), but overall services volume growth moderated to 5.3 per cent in 1Q 2025 (4Q 2024: 6.1 per cent), weighed down by slower expansion in the food and beverages, finance and insurance, info and communication, private education, healthcare, and recreation subsectors,” it said.

CIMB said global headwinds, including US trade policy uncertainty and US-China tensions, cloud Malaysia’s growth outlook.

It said the 90-day pause on US reciprocal tariff offers temporary relief for non-retaliating countries like Malaysia, with export activity, particularly in manufactured goods, likely supported by front-loaded shipments in the interim during ongoing US trade negotiations.

“However, prolonged uncertainty may dampen capital spending and hiring plans, potentially slowing growth momentum.

“We maintain our full-year GDP growth projection of 4.0 per cent, reflecting risks from weak external demand and adverse spillover to the domestic economy,” it said.

It also said that upside risks may emerge if Malaysia and the US reach a trade deal within the 90-day window, amid encouraging progress in US-China and US-United Kingdom negotiations, it added.

-- BERNAMA