Economic growth loses steam in Q3

GDP growth slows but beats market expectations: According to an advance estimate, GDP growth moderated to 5.3% year on year in the third quarter from 5.9% in the second quarter. Nevertheless, the expansion was faster than markets had anticipated and remained robust overall.

Broad-based growth moderation drives Q3’s result: Looking at available data, the agricultural sector grew 4.0% annually in the third quarter, decelerating from the second quarter's 7.2% increase. In addition, the industrial sector lost steam, growing 5.6% in Q3 (Q2:+5.7% yoy): The worst decline in mining and quarrying in three years outweighed stronger manufacturing and construction growth. Lastly, services growth waned to 5.1% in Q3 (Q2: +5.9% yoy).

Both domestic demand and exports to decelerate ahead: In 2025, the economy is set to grow at a softer pace compared to 2024’s projection: Both domestic demand and exports are forecast to decelerate next year, largely capped by still-tight monetary conditions plus an unfavorable external backdrop. Looser-than-expected fiscal spending is an upside risk, while protectionist policies under U.S. President Trump pose a downside risk.

Panelist insight: United Overseas Bank analysts Julia Goh and Loke Siew Ting commented on the outlook: “Going into 2025, a record expansionary budget unveiled for 2025 and the continued implementation of national master plans will keep the economic outlook resilient […]. Higher government cash and minimum wages as well as special cash assistance will underpin private consumption growth next year.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Malaysian government consumption projections for the next ten years from a panel of 16 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable government consumption forecast available for Malaysian government consumption.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Malaysian government consumption projections.

Want to get access to the full dataset of Malaysian government consumption forecasts? Send an email to info@focus-economics.com.