Analysts Warn of Slower Malaysia Growth in 2H 2025 Amid Global Policy Uncertainties

Malaysia’s economic momentum is expected to moderate in the second half of 2025 as global policy uncertainties, trade barriers, and geopolitical tensions weigh on exports and investment flows, according to the Socio-Economic Research Centre (SERC).

In its latest quarterly outlook, SERC noted that global economic expansion remains uneven, supported by resilient labour markets, front-loaded trade, and fiscal stimulus, but clouded by high public debt, volatile commodity markets, and renewed inflation risks that could delay monetary easing. The U.S. Federal Reserve’s interest rate path remains a key market focus, with global central banks easing policy at varying speeds.

Slower Malaysia Growth

Domestically, Malaysia recorded 4.5% year-on-year GDP growth in Q2 2025, supported by domestic demand. However, SERC projects growth will ease to 3.5%–4.0% in the second half as cautious consumer spending—pressured by a higher cost of living and expanded Sales and Service Tax (SST)—dampens momentum. While businesses may pass on higher costs to consumers, continued cash aid under the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) programmes, totalling RM15 billion, alongside moderate wage growth and lower interest rates, will provide some relief to low-income households.

Looking ahead, SERC emphasised that the upcoming 13th Malaysia Plan (2026–2030) will only succeed with strong governance, political reforms, and credible institutions. Effective implementation, rigorous monitoring, and prioritised resource allocation are deemed essential for long-term socio-economic resilience.

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