FMM Warns of Slower Growth Ahead as Global and Domestic Challenges Weigh on Malaysia’s Economy

KUALA LUMPUR, Sept 4, 2025 – The Federation of Malaysian Manufacturers (FMM) has cautioned that Malaysia’s economic growth is set to moderate in the second half of 2025 amid rising costs, global headwinds and policy uncertainties.

The IMF projects global growth at 3.0% this year, down from 3.3% in 2024, while the World Bank forecasts an even weaker 2.3%—the lowest since 2008 outside of recessions. Advanced economies are expected to see the sharpest slowdown, with the U.S. projected at 1.4%, the EU at 1.1% and Japan at 0.7%. China’s growth is revised down to 4.5%.

Slower Growth

Malaysia posted a stronger-than-expected 4.4% GDP growth in 2Q 2025, driven by services, manufacturing and construction, alongside robust private consumption and investment. Inflation eased to 1.3% in the quarter, with the ringgit strengthening to RM4.22/USD.

FMM, however, expects growth to soften to 3.5–3.6% in 2H 2025 as SMEs face rising business costs from subsidy rationalisation, higher utility tariffs, expanded SST and wage pressures. Global uncertainties, particularly U.S. trade policies and weaker external demand, are also dampening prospects.

FMM stressed that steady domestic demand, sound policy execution and resilience in the labour market will be critical to cushioning the slowdown.

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