4.4% GDP Growth In First Quarter 2025 Fortifies Malaysia’s Fundamentals In The Face Of Global Uncertainties

A rousing performance across key economic sectors lifted Malaysia’s Gross Domestic Product (GDP) by 4.4% in the first quarter of 2025 (Q1 2025), in line with the GDP Advance Estimates and higher than the 4.2% growth recorded in the corresponding quarter of 2024 (Q1 2024).

The GDP growth in Q1 2025 was buoyed by the Services (5%), Manufacturing (4.1%), and Construction (14.2%) sectors. Further fuelling the growth momentum was stronger consumer spending during the Chinese New Year and pre-Hari Raya festive periods, the implementation of the new minimum wage in February 2025, and the recent increase in civil servant salaries.

“Private consumption, undergirding Malaysia’s economy, grew 5% in Q1 2025. This was supported by encouraging labour market performance with a decline in the unemployment rate to 3.1% and benign inflation at 1.5% — both marking the lowest levels recorded under the MADANI administration,” said Finance Minister II YB Senator Datuk Seri Amir Hamzah Azizan.

This is compared to the performance in Q1 2024 where private consumption rose by 4.7%, while the unemployment rate stood at 3.3% and inflation registered at 1.7%.

“Investments continued their growth momentum in Q1 2025, recording a 9.7% increase — reflecting the positive response from global investors to the MADANI Government’s prodevelopment policies and strong emphasis on sustainability, as outlined in the National Energy Transition Roadmap (NETR), New Industrial Master Plan (NIMP) 2030, National Semiconductor Strategy (NSS), and other key national policy frameworks,” he added.

The Government is also actively working to attract more high-quality foreign direct investment (FDI) to stimulate growth, while maintaining a dynamic ecosystem — after recording the decade-high domestic investment in 2024.

Neutral positioning and an accelerated reform agenda form strong defence against rising global uncertainty

At the same time, the Government acknowledges the presence of downside risks to the official 2025 GDP growth forecast of 4.5% to 5.5%, owing to tapering global demand, heightened geopolitical tensions, and the rising prevalence of protectionist trade policies — particularly the recent announcement of reciprocal tariffs by the United States of America (US).

The MADANI Government will revise the 2025 GDP forecast once the reciprocal tariff situation stabilises and greater clarity emerges. In the meantime, the Government will implement several mitigation measures to further strengthen the country’s fundamentals — including efforts to boost domestic direct investment (DDI). Government-Linked Investment Companies (GLICs) have committed to invest a combined RM25 billion in DDI this year under the GEARuP programme.

The MADANI Government will also continue to engage the US in bilateral trade discussions, while also leveraging multilateral platforms such as the Association of Southeast Asian Nations (ASEAN) and the Regional Comprehensive Economic Partnership (RCEP) to uphold a fair and conducive global trade environment.

The MADANI Government will redouble efforts to diversify export markets and secure new trade agreements to mitigate the impact of global trade disruptions. These efforts have already borne early fruit in 2024, as reflected in increased investment and exports to non-traditional markets such as Egypt, Pakistan, and Cambodia — alongside stronger export growth to other ASEAN member states.

The Government will also work to accelerate the implementation of the Ekonomi MADANI reform agenda, focusing on fiscal sustainability, strengthening Malaysia’s economic value chains, protecting the welfare of the broader population through social safety nets, and unlocking the potential of the local talent pool.

In addition, the MADANI Government will continue to closely monitor both domestic and global economic developments, and is prepared to implement responsive and appropriate policy measures to ensure that Malaysia’s economic growth remains consistent, sustainable, and inclusive — for the well-being of all segments of society. The Government remains committed to maintaining investor confidence and protecting domestic industries amid an increasingly complex global economic landscape.