Malaysian economy’s hot run continues despite Trump’s tariff squeeze

Malaysia predicts growth this year is likely to approach 4.8 per cent after a resurgent exports sector defied the impact of US tariffs in the third quarter.

The nation’s growth rate in 2025 is set to be “closer to” the upper range of the official forecast of 4 per cent to 4.8 per cent, and may even exceed it, Bank Negara Malaysia Governor Abdul Rasheed Ghaffour said at a briefing in Kuala Lumpur on Friday.

An expansion in household spending and sustained investment activity will drive the economy next year, with trade set to moderate, according to the central bank. A rate cut in July is working its way through the economy and will provide some support, the governor said.

The benchmark rate, at 2.75 per cent, is “supportive and appropriate” for the economy, and Malaysia has both financial and monetary room to “take further action”, if needed, he added.

Malaysia’s gross domestic product expanded 5.2 per cent in the third quarter from a year earlier, according to the central bank and statistics department. That is in line with the advance estimate and median forecast in a Bloomberg survey. On a sequential basis, the economy grew 2.4 per cent from the previous three months.

“Strong growth, which is also robust in terms of breadth, suggests that BNM will stay on hold at least through the first half of 2026,” said Sanjay Mathur, an economist with Australia & New Zealand Banking Group. “BNM can now afford to hold its firepower such that it has the capacity to respond in the event of an unanticipated shock.”

  

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