MALAYSIA’S economy grew by 4.4% in the first quarter of 2025, outperforming the same period last year and reflecting the country’s strengthening domestic fundamentals.
The Ministry of Finance (MOF) in a statement today, said the growth was underpinned by key sectors including services (5%), manufacturing (4.1%), and construction (14.2%), the Ministry of Finance announced.
This performance is in line with the advance GDP estimates and comes amid strong consumer spending during the festive seasons, the rollout of the revised minimum wage in February, and recent salary increases for civil servants.
“Private consumption, the main pillar of Malaysia’s economy, grew by 5% in Q1 2025, supported by a strong labour market, with the unemployment rate falling to 3.1% and inflation stabilising at 1.5%—both the lowest levels under the MADANI Government,” said Second Finance Minister Senator Datuk Seri Amir Hamzah Azizan.
In comparison, Q1 2024 recorded a 4.7% rise in private consumption, with unemployment at 3.3% and inflation at 1.7%.
Investment activity continued to gain momentum with a 9.7% increase in Q1 2025, driven by investor confidence in the government’s developmental and sustainability-focused agenda.
Efforts to attract high-quality foreign direct investment (FDI) are ongoing, complemented by robust domestic investment, which reached a ten-year high in 2024.
However, the government acknowledged potential headwinds, citing weakening external demand, escalating geopolitical tensions, and rising trade protectionism—particularly the United States’ recent imposition of reciprocal tariffs.
In light of these risks, the MADANI Government is prepared to revise the current GDP forecast of 4.5% to 5.5% for 2025, should the global environment further deteriorate.
Among the mitigation measures in place is a RM25 billion commitment from government-linked investment companies (GLICs) under the GEAR-uP programme, aimed at strengthening domestic direct investment (DDI).
Malaysia will continue bilateral trade negotiations with the United States and leverage multilateral platforms such as ASEAN and the Regional Comprehensive Economic Partnership (RCEP) to promote fair and stable trade conditions.
Diversification of export markets is also being prioritised. The government reported early success in 2024, with increased investment and trade volumes in non-traditional markets such as Egypt, Pakistan, and Cambodia, in addition to gains within ASEAN.
Looking ahead, the government will accelerate the implementation of the MADANI Economic Reform Agenda, focusing on fiscal sustainability, strengthening domestic economic value chains, protecting social welfare, and nurturing local talent.
“The MADANI Government will remain vigilant of both domestic and international developments and is ready to implement appropriate policies to ensure consistent, sustainable and inclusive growth,” said Amir Hamzah.
“We remain committed to preserving investor confidence and shielding Malaysia’s economic interests amid a challenging global landscape.” - May 16, 2025
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