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MALAYSIA’S economic growth has remained resilient despite ongoing global trade tensions and geopolitical uncertainty, according to the Ministry of Finance (MoF), which noted that the country’s performance in the second quarter of 2025 outpaced several regional peers.
In a written reply to the Dewan Negara published on Parliament’s website today, the ministry said the national economy grew by 4.4 per cent year-on-year in Q2 2025, driven largely by robust domestic demand. In comparison, Singapore and Thailand posted growth rates of 4.3 per cent and 2.8 per cent respectively.
“Overall, Malaysia’s GDP growth is projected to fall within the range of 4.0 per cent to 4.8 per cent for the full year, taking into account the current global economic challenges and conditions,” the MoF said.
The response came in reply to a question from Senator Pele Peter Tinggom, who had asked for a comparative update on Malaysia’s economic performance relative to other ASEAN economies.
However, the ministry acknowledged that Malaysia’s growth trailed that of Vietnam, the Philippines, and Indonesia, with Vietnam leading the region at 7.9 per cent. The Philippines recorded 5.5 per cent growth, while Indonesia’s economy expanded by 5.1 per cent.
The ministry said these differences reflect the diversity of economic structures and policy strategies among ASEAN nations. In Malaysia’s case, recent growth was attributed in part to the government’s inclusive and balanced MADANI Economic Framework.
Meanwhile, economists pointed to the strengthening of Malaysia’s foreign exchange reserves as a further sign of macroeconomic resilience. Reserves stood at US$122.7 billion as of end-August — their highest level since November 2014 — after rising by US$1.4 billion month-on-month, marking the fifth consecutive monthly increase.
For the first eight months of 2025, foreign reserves expanded by US\$6.5 billion, nearly double the US$3.3 billion recorded during the same period last year.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the rise in reserves reflects continued net inflows in the balance of payments, supported by both trade surpluses and investment activity.
“Higher reserves are certainly good for Malaysia, as Bank Negara Malaysia would have more resources to safeguard our currency while reflecting better liquidity in the financial system. I suppose this can be a plus point for Malaysia from the macroeconomic standpoint,” he told Business Times.
Afzanizam added that steady investment inflows — including repatriated income from government-linked investment companies — would likely continue supporting reserve accumulation moving forward.
Doris Liew, a Southeast Asia-focused economist, said the build-up in reserves has been supported by both cyclical and structural factors.
“Sustained FDI inflows into high-value sectors and a still-positive trade balance provide a solid foundation, while the firmer ringgit has also helped preserve reserves,” she said.
However, she cautioned that global risks — including geopolitical tensions and commodity price swings — could weigh on sentiment. “While cyclical factors such as trade surpluses may taper, structural investments remain more durable in supporting long-term resilience.”
On the currency front, Liew said stronger reserves offer Bank Negara greater room to manage volatility without compromising its market-determined exchange rate regime. She noted that Malaysia’s current reserve adequacy ratios are “broadly comfortable by international standards”, helping to reinforce investor confidence.
Looking ahead, Liew expects the pace of reserve growth to moderate through the end of 2025 due to potential headwinds, including new US tariffs and a slowdown in frontloaded goods trade.
“A potential turn in US monetary policy, with rate cuts on the horizon amid slowing growth, could ease capital outflow pressures and support regional currencies,” she added. “Still, the upside for reserves is limited, underscoring the need for prudent management and selective interventions to safeguard stability.” - September 11, 2025