Bank of America Forecasts Malaysian Economy to Grow 4.5% in Q2, Exceeding Expectations.

Bank of America expects Malaysia's economy to expand 4.5% in Q2, beating expectations. The forecast comes amid the country's strong export growth and improving domestic demand. The bank's outlook is based on a resilient manufacturing sector, increased consumer spending, and a rebound in the tourism industry. The projection is higher than the 4.1% growth rate predicted by the International Monetary Fund.

Malaysia's economy grew by 4.5% in the second quarter of 2025, according to advance estimates released on July 18, 2025 [1]. This growth rate surpasses both the consensus expectations of 4.4% and the Bank of America's own projection of 3.8% [3]. The resilience of domestic consumption and steady manufacturing growth offset a slowdown in exports, driving the robust performance.

The services sector remained the primary driver of economic growth in the quarter, expanding by 5.3% year-over-year, while the manufacturing sector grew by 3.8% [1]. Trade activity slowed in May due to weaker export demand, with exports declining for the second consecutive month in June, falling by 3.5% year-over-year [1].

The Bank of America forecast suggests that the economy will continue to expand at a trend pace of 4% or higher through 2027, supported by strong domestic demand and a rebound in the tourism industry [3]. The central bank, which recently cut interest rates for the first time in five years, is expected to maintain its current stance due to the positive GDP growth [3].

Malaysia's economy grew by 5.1% in 2024, driven by domestic demand, record approved investments, and robust exports [1]. However, the country faces economic uncertainties due to the U.S. President Donald Trump's tariff drive, with a 25% tariff on its exports to the United States unless a trade deal is reached by August 1, 2025 [1].

Final second-quarter GDP figures are expected to be released on August 15, 2025.

References:
[1] Reuters. (2025, July 18). Malaysia's economy grew 4.5% in Q2, advance estimates show. Retrieved from https://www.reuters.com/world/asia-pacific/malaysias-economy-grew-45-yy-q2-advance-estimates-show-2025-07-18/
[2] TradingView. (2025). Malaysia's economy grew 4.5% in Q2, advance estimates show. Retrieved from https://www.tradingview.com/news/reuters.com,2025:newsml_P8N3MI06Q:0-malaysia-s-economy-grew-4-5-y-y-in-q2-advance-estimates-show/
[3] Investing.com. (2025). Bank of Malaysia likely to remain on hold as GDP growth surprises. Retrieved from https://www.investing.com/news/economy-news/bank-of-malaysia-likely-to-remain-on-hold-as-gdp-growth-surprises-bofa-93CH-4141455