Data jointly released by Bank Negara Malaysia and the Department of Statistics Malaysia on August 15th showed that despite a complex and volatile external environment, Malaysia’s gross domestic product (GDP) grew by 4.4% year-on-year in the second quarter of this year, the same as in the first quarter, thanks to strong domestic demand and continued growth in the services and manufacturing sectors. This continued the solid growth momentum. While slightly lower than the Department of Statistics’ earlier forecast of 4.5%, it was higher than the market expectation of 4.3%. Seasonally adjusted, GDP grew by 2.1% quarter-on-quarter in the second quarter, higher than the 0.7% growth in the first quarter. This growth, achieved amidst significant global economic uncertainty, demonstrates the resilience and stability of the Malaysian economy.

Strong domestic demand expansion is one of the key factors driving economic growth. Data shows that increased household spending is the primary driver of domestic demand growth in Malaysia. Supported by a strong labor market, household consumption grew by 5.3% year-on-year in the second quarter, while public consumption grew by 6.4%. Policy measures implemented by the Malaysian government, such as raising the minimum wage and adjusting civil servant salaries, have further enhanced consumer purchasing power and boosted the consumer market. In addition, increased household consumption also boosted the retail, catering, and entertainment sectors. Private investment and public investment also grew by 10.2% and 6.8%, respectively.

The service and manufacturing sectors performed strongly. Data showed that the service sector grew by 5.1% year-on-year, becoming one of the main drivers of economic growth. The robust performance of sub-sectors such as wholesale and retail, and food and beverages drove growth in the service sector. Despite a slowdown in manufacturing growth, it still achieved a year-on-year increase of 3.7%. Industries such as electrical, electronic, and optical products maintained sustained growth. Furthermore, the agriculture and construction sectors also saw growth of 2.1% and 12.1%, respectively.

The labor market performed stably. As of May 2025, Malaysia’s total employment increased by 2.9% year-on-year to 16.86 million. The unemployment rate remained at 3%, down 5.7% from the same period last year, demonstrating a strong recovery in the labor market. The labor force participation rate also rose to 70.8%, up 0.2 percentage points from 70.6% in the same period last year. A stable labor market not only provided strong support for household consumption but also promoted sustainable economic growth.

While Malaysia’s trade performance faced some challenges in the second quarter, there were some bright spots. Net exports plummeted by 72.6% in the second quarter due to a decline in commodity exports, particularly those related to the mining industry. However, strong exports of electrical and electronic products partially offset the overall decline in exports. Furthermore, uncertainties and risks surrounding the US tariff increase persist, and the full impact will take time to materialize. However, Malaysia’s key role in regional supply chains and trade cooperation with other countries provide some cushion for its export markets.

In terms of prices, inflation remained moderate in Malaysia in the second quarter. Overall inflation fell to 1.3% from 1.5% in the first quarter, while core inflation remained at 1.8%. Lower fuel prices and slower food price increases were the main drivers of the decline. This moderate inflation environment provides stability for consumer purchasing power and provides room for monetary policy adjustments. The Bank of Malaysia expects overall inflation to remain moderate this year, ranging from 1.5% to 2.3%.

Analysts point out that the Malaysian economy will continue to face challenges in the second half of this year. Economists anticipate a further slowdown in exports, leading to a decline in economic growth. However, continued growth in domestic demand and stable investment activity will provide some support to the economy. Furthermore, the recovery of the tourism industry and the advancement of infrastructure projects will inject new impetus into the economy. Bank Negara Malaysia stated that while economic growth is driven by strong household spending and positive labor market conditions, the uncertainty surrounding the US government’s tariff increase makes forecasting challenging.

Kuala Lumpur: On the evening of August 1st, the 2025 “Belt and Road Vision, Flourishing Belt and Road” China-Malaysia Youth Performance Exhibition was held in Kuala Lumpur, the capital of Malaysia. The evening was co-organized by the China Association for Promoting World Ethnic Cultural Exchange, the Ministry of Tourism, Arts and Culture of Malaysia, the United Nations Center for Sustainable Development Goals and Leadership Development, and the Kuala Lumpur City Hall. Nearly 100 guests attended the event.

Qiu Li, Vice President and Secretary-General of the China Association for Promoting World Ethnic Cultural Exchange, stated in her speech that young people are the torch of civilizational inheritance. This performance serves not only as a platform for cultural exchange but also as a nurturing ground for China-Malaysia friendship. A representative from the Ministry of Tourism, Arts and Culture of Malaysia stated that this year marks the 51st anniversary of the establishment of diplomatic relations between Malaysia and China, and expressed hope that through more youth interaction, the friendship between the two countries will blossom in the new era.

On the 7th, the Malaysian media “Sin Chew Daily” published an editorial entitled “Adjustment and Breakthrough under the US Tariff Barrier”, saying that the tariff negotiations between Malaysia and the United States are an unequal “trade breakthrough war” and many of the US demands in the negotiations are not fair. Malaysia needs to choose the “battlefield” and “partners” more wisely and strive to turn the crisis into an opportunity. The article excerpt is as follows:

Even if the tariff negotiations between Malaysia and the United States have not reached a deadlock, there has been no turnaround and no new situation. Malaysian Minister of Investment, Trade and Industry Zafrul, who led a delegation to the United States for inspection and held online tariff negotiations with the United States on the 6th, told the media that Malaysia will actively explore markets in countries and regions such as Russia, Africa, the Middle East and South America.

Zafrul revealed that the US side proposed requirements in the trade negotiations to solve the trade deficit, ensure the security of US technology, and promote Malaysian companies to invest in the United States. From the details, “these requirements are not fair.”

The trade deficit is not a unilateral problem, but is due to the lack of competitiveness of US products (which want to export to Malaysia). “If we don’t want a trade deficit, we will be forced to import higher-priced products from the United States, but what if people don’t buy them? Should we force them to buy and sell?”

The United States also requires the security of American technology, emphasizing that American technology must not fall into the hands of “unapproved” objects. However, at a time when industrial division of labor is becoming more detailed and refined, the supply chain is widely distributed, and the US requirements will seriously affect production efficiency.

In addition, the United States requires Malaysian companies to invest in the United States in line with the needs of the US industry. The reality is that on the one hand, Malaysian companies have invested a lot in the United States; on the other hand, overseas investment must consider multiple factors such as cost, market and raw materials. “Investing for the sake of investment will eventually suffer serious losses.”

Malaysia must survive and break through the wave of US protectionism, actively adjust its strategy to new markets, create a strategic layout of “removing unilateral dependence and strengthening multilateral balance”, and reduce the risk of excessive export dependence on the United States through a balance of multiple markets.

Bahrain National reported on May 6: An official Bahrain delegation led by Bahrain’s Minister of Sustainable Development and CEO of the Economic Development Board, His Excellency Noor Al Khalifa, and Minister of Commerce and Industry, His Excellency Abdullah Fakhro, began a two-day visit to Malaysia. The visit, which comes shortly after a high-level visit between the leaders of the two countries, aims to promote economic and trade exchanges and practical cooperation between Bahrain and Malaysia.

During the visit, the delegation will meet with senior officials and representatives of Malaysian government agencies, including Malaysian Prime Minister Anwar, Malaysian Minister of Investment and Trade, Minister of Enterprise and Cooperative Development, and representatives of the Investment Development Authority.

Last year, Bahrain and Malaysia celebrated the 50th anniversary of the establishment of diplomatic relations between the two countries. The two countries continue to strengthen cooperation by signing agreements and memorandums of understanding to strengthen cooperation in the fields of economy, trade, investment, technology, culture and science.