Malaysia Economy Expands 4.5% Year-On-Year in Q2

Malaysia's economy expanded by 4.5% year-on-year in the second quarter of 2025, slightly up from 4.4% growth in the previous quarter, driven mainly by resilient domestic consumption and a faster rise in agricultural activity, particularly palm oil production. The services sector was the primary growth driver, accelerating to 5.3%, supported by wholesale and retail trade, transportation, business services, and seasonal consumer spending. Manufacturing growth moderated to 3.8%, while construction growth slowed to 11%, and mining and quarrying contracted further due to lower natural gas and crude oil production. Despite these gains, the export sector faced headwinds from US tariffs and global political uncertainties, with exports falling for the second consecutive month in June. Malaysia's central bank has cut interest rates and lowered growth forecasts amid these external challenges, and Prime Minister Anwar Ibrahim has expressed doubts about meeting the year's growth target due to the impact of US tariffs. Overall, while domestic demand remains strong, the external environment remains challenging, affecting the export-oriented sectors.