Malaysia’s economy accelerates to 5.2% growth in third quarter despite US tariffs

KUALA LUMPUR -Malaysia’s growth unexpectedly accelerated in the third quarter of 2025, with the economy firing across all sectors and exports defying US President Donald Trump’s imposition of higher tariffs.

The economy grew 5.2 per cent in the July to September period from a year earlier, according to advance estimates from Malaysia’s Department of Statistics on Oct 17.

That is faster than even the highest estimate in a Bloomberg survey, and exceeds the pace of expansion seen in the previous three quarters.

“Domestic demand continued to be the primary engine of growth, particularly in tourism-related activities during public and school holidays,” Malaysia’s chief statistician Mohd Uzir Mahidin said in a statement, noting that activity was supported by cash disbursements and an interest rate cut.

Sustained capital investment and rising external demand bolstered the expansion, despite uncertain trade policies, he added.

Mr Trump’s global trade war has so far failed to derail South-east Asia’s economies, though they are facing some of the highest tariff rates.

Vietnam’s 8.23 per cent growth was the fastest expansion since 2022 as factories went into overdrive shipping goods to the United States before the levies hit in early August. And while

Singapore’s third-quarter growth slowed to 2.9 per cent

from a year ago, that still beat analyst expectations. 

The Philippines, Thailand and Indonesia are set to unveil their third-quarter figures in November.

Malaysia’s trade numbers for September offer a snapshot of the muted impact of the 19 per cent levy on shipments to the US.

Exports grew 12.2 per cent, beating the highest estimate in a Bloomberg survey, while imports rebounded by 7.3 per cent, bringing the trade surplus to RM19.86 billion (S$6.1 billion), according to data also released on Oct 17.

Export growth in September was recorded across all sectors, according to Malaysia’s Investment, Trade and Industry Ministry.

Malaysia’s latest gross domestic product figure puts it on track to meet the official forecast of 4 per cent to 4.8 per cent growth in 2025.

The country is counting on resilient domestic demand to provide a buffer as US tariffs threaten exports.

Growth is expected to moderate in 2026 to a range of 4 per cent to 4.5 per cent on external volatility, according to the government.

Exports to the US jumped 24.4 per cent in September on account of robust exports of electrical and electronic products, the Investment, Trade and Industry Ministry said.

Shipments to China gained 2.9 per cent. 

The central bank cut interest rates in July by a quarter point to pre-emptively support the economy, warning that “the balance of risks to the growth outlook remains tilted to the downside”.

It also released more funds into the banking system to encourage lending and help boost economic activity.

The reduction in borrowing costs and the government’s one-off cash assistance of RM100 played a supportive role in stimulating domestic consumption, according to Datuk Seri Mohd Uzir. BLOOMBERG