The Malaysian economy grew at 5.2% during the third quarter, beating growth during the second quarter, which stood at 4.4%. This growth rate is a clear indication that Malaysia is less affected by global trade uncertainty. Bank Negara Malaysia indicated that such strong growth can be attributed to increased exports, dwelling consumption, and continued investments. The Southeast Asian country is on track to register higher growth within the projected annual range due to raised concerns over trade disruption posed by global tariff policy.
Export rebound sets economic momentum because of trade tensions
Bank Negara Malaysia maintained its overnight policy rate at 2.75%. This is to support economic expansion while inflation is still relatively manageable. The rate of headline inflation remained at 1.3% during July to September, while core inflation increased to 2% compared to last year. This is a balance between caution and optimism about an economy that is known to have strong fundamentals.
The projection is that annual headline inflation is expected to remain at 1% on prevailing economic conditions. Abdul Rasheed highlighted that this accommodative stance on monetary policy will continue to support growth outcomes while sustaining price stability, particularly with respect to persistent global economic uncertainties.
The main economic factors showing balanced growth are:
- The net exports saw a rise of more than 17% on a year-ago basis during Q3.
- Despite moderation, private consumption continued to grow with a strong 5% rate.
- Investment in infrastructure and approved investments fueled growth
- The economy saw strong consumption due to sustained job and pay growth.
The main bank adopts an accommodative policy regime to support growth
The overnight policy rate is currently being maintained at 2.75% by Bank Negara Malaysia to ensure that it registers growth within the economy while still being within manageable inflation levels. This rate is a balance between being cautious and being optimistic about an economy that is known to have strong fundamentals. The rate of inflation is currently at 1.3%, while core inflation is at 2% compared to last year.
The key projection announced by the central bank is to keep the annual headline inflation rate fixed at 1% relying on the prevailing economic conditions. The third-quarter performance achieved by Malaysia is an indication of the strength shown by its economy. Abdul Rasheed emphasized that owing to continuing uncertainties within the global economy, its supportive environment to Malaysia’s monetary policy shall continue to play its part to ensure growth and price stability.
Investment momentum remains supportive of long-term economic growth outlooks
The third quarter saw strong private and public investments, exemplified by the momentum achieved within infrastructure developments, harvesting approved investments, and execution of National Master Plans, which helped to keep growth on an uptrend. These forces are vital drivers to keep Malaysia moving on its track to more development within the economy.
Growth trajectory positions Malaysia for upper-range annual targets
Malaysia is on course to hit the upper end of its projected growth range of 4.0% to 4.8% on an annual basis, on the back of its performance during the third quarter this year. The country’s central bank said it is confident that it will continue on this positive glide path into the final quarter. Nevertheless, a more modest growth projection of 4.0% to 4.5% is foreseen by the central bank in 2026, which takes into account the effects that trade tariffs may have on Malaysia. This is a balance between caution and optimism about an economy that is known to have strong fundamentals.
The third-quarter result achieved by Malaysia is a display of resilience on the part of its economy. Malaysia is enjoying balanced growth influenced by exports, consumption, and investments, which is a suitable foundation for its sustained growth. The uncertainties present around external factors may affect Malaysia’s growth rate, but its economy is indeed well-managed to ensure continued development.