Economic growth rises to one-year high in Q3

Q3’s acceleration confirmed: A second release confirmed that Malaysia's GDP expanded 5.2% on a year-on-year basis in Q3, following a 4.4% expansion in the prior quarter and marking the best reading in a year. On a seasonally adjusted quarter-on-quarter basis, economic output increased 2.4% in Q3, following a 2.2% expansion in the previous quarter.

External sector sustains economic momentum: Compared to the prior period's data, the reading for government consumption improved in Q3 (+7.1% on a year-on-year basis vs +6.4% in Q2). In contrast, readings softened for private consumption (+5.0% vs +5.3% in Q2), fixed investment (+7.4% vs +12.1% in Q2), exports of goods and services (+1.4% vs +2.6% in Q2) and imports of goods and services (+0.4% vs +6.6% in Q2). While the contribution of domestic demand to overall GDP growth softened from Q2, it was more than offset by net exports, which rebounded from the prior quarter.

Panelist insight: ANZ’s Arindam Chakraborty and Sanjay Mathur said: “Looking ahead, the strength in the labour market suggests that private consumption will remain supportive in the medium term. Additionally, strong investment approvals should bolster private fixed investment going forward. Even with relatively slower external demand in the medium term, growth is likely to remain underpinned by domestic demand. Consequently, we do not anticipate any changes to monetary policy for an extended period.” EIU analysts commented on the outlook: “The outlook is clouded by elevated global protectionism, which will dampen trade and investment flows. Front-loaded export shipments ahead of the reciprocal tariffs imposed by the US Trump administration supported the external sector in the first half of 2025, but we expect a notable slowdown in exports in 2026. Demand from the U.S. is likely to weaken in 2026 as firms in that market run down stockpiled inventories. This will have spillover effects on global trade more generally.”

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