BIX ARTICLE
Economic and Financial Developments in Malaysia in the Third Quarter of 2025
Nov 14, 2025
|
6 min read
Featured Posts
Social Bonds Illustrative Use-Of-Proceeds Case Studies Coronavirus
Jul 06, 2020
|
2 min read
Sustainable Banking Network (SBN) Creating Green Bond Markets
Jul 06, 2020
|
2 min read
Why is Inflation Making a Big Comeback After Being Absent for Decades in the U.S.?
Mar 24, 2022
|
7 min read
SC issues Corporate Governance Strategic Priorities 2021-2023
Mar 29, 2022
|
3 min read
14 Nov 2025
The Malaysian economy expanded by 5.2% in the third quarter of 2025 (2Q 2025: 4.4%), driven by sustained domestic demand and higher net exports. Household spending was supported by positive labour market conditions, income-related policy measures, and cash assistance programmes. Investment activity was underpinned by continued capital expansion by both private and public sectors. On the external front, net exports registered higher growth as export growth outpaced import growth.
On the supply side, growth was led by the services and manufacturing sectors. Growth in the services sector was mainly contributed by consumer-related sub-sectors, while the manufacturing sector’s performance was driven by stronger production in electrical and electronics (E&E) and consumer-related goods. Meanwhile, the mining and quarrying sector rebounded, reflecting a recovery in crude oil and natural gas production post-scheduled maintenance work. On a quarter-on-quarter, seasonally-adjusted basis, growth expanded by 2.4% (2Q 2025: 2.2%).
Headline inflation remained stable during the quarter while core inflation edged higher
Headline inflation remained stable at 1.3%, while core inflation increased to 2% (2Q 2025: 1.3% and 1.8%, respectively). While the higher core inflation added impetus to headline inflation during the quarter, this was offset by declines in selected administered prices. In particular, electricity (-4.6%; 2Q 2025: 0%) and diesel (-5%; 2Q 2025: 8%) prices were lower during the quarter, in line with the recent electricity tariff restructuring and moderate global cost conditions. Inflation pervasiveness, measured by the share of CPI items registering monthly price increases, edged higher to 43.8% during the quarter (2Q 2025: 41.8%), while remaining below the historical average of 44.5%.
The ringgit appreciated against currencies of most trading partners in the third quarter of 2025
In the third quarter of 2025, the ringgit’s nominal effective exchange rate (NEER) appreciated by 0.8% (YTD as of 12 November 2025: 5.3%) against the currencies of Malaysia’s major trading partners. The ringgit also remained broadly stable against the US dollar, with a marginal appreciation of 0.05% (YTD as of 12 November 2025: 8.2%). This movement was driven by both external and domestic factors. On the external front, the US Federal Reserve’s easing of monetary policy in September coupled with expectations of further rate cuts amid growing concerns about the US economy’s outlook, has supported the ringgit during the quarter. In addition, the announcement of trade agreements between the US and several of its trading partners, including Malaysia, has helped ease tariff-related uncertainties and improve sentiment, further supporting the ringgit’s performance.
Domestically, Malaysia's positive economic growth prospects, supported by the Government’s commitment to domestic structural reforms and fiscal sustainability, will continue to provide support to the ringgit. BNM remains committed to ensuring the orderly functioning of the domestic foreign exchange market.
Credit growth increased amid higher growth in outstanding corporate bonds and business loans
Credit to the private non-financial sector grew by 5.9% in the third quarter of 2025 (2Q 2025: 5.2%). Outstanding corporate bonds expanded by 7.3% (2Q 2025: 4.3%) while growth in outstanding loans was sustained at 5.6% (2Q 2025: 5.5%). Business loans grew by 5.4% (2Q 2025: 4.5%) following higher growth in investment-related loans, particularly among non-SMEs. SME loan growth also increased slightly, supported by growth in working capital loans amid sustained level of applications for this purpose. Meanwhile, household loan growth moderated slightly to 5.7% (2Q 2025: 6%) following slower growth for personal use loans. Notwithstanding, household loan demand remained broadly steady across most purposes and was met by sustained approvals.
Resilient domestic demand will support growth going forward
Despite the challenging external environment, Malaysia’s economic outlook remains on track to achieve growth between 4% and 4.8% in 2025, supported by resilient domestic demand. Household spending will be supported by continued employment and wage growth, as well as income-related policy measures. Investment activity will be sustained by progress of infrastructure projects, further realisation of approved private investments, and the implementation of national master plans. On the external front, export growth is expected to be impacted by tariffs and more moderate external demand. However, growth would be supported by continued demand for E&E goods, inbound tourism and the recovery in mining-related exports.
Bank Negara Malaysia Governor Dato’ Sri Abdul Rasheed Ghaffour says, ‘Malaysia’s economy grew by 4.7% in the first nine months of 2025, within the official forecast range of 4% – 4.8%, reflecting our continued resilience in the face of global challenges. Looking ahead, global economic conditions will remain challenging and we need to keep strengthening our economic buffers to weather any headwinds that may come our way.’
The Malaysian economy recorded strong growth of 5.2% in the third quarter of 2025
The latest indicators point towards a continued expansion in global growth. While the impact of higher tariffs would continue to weigh on global growth, the outlook remains supported by resilient labour market conditions, moderating inflation, less restrictive monetary policy and supportive fiscal policy. The conclusion of more trade negotiations has, to some extent, eased global uncertainty. Downside risks remain, arising from potentially higher tariffs, especially product-specific ones, and escalation in geopolitical tensions. Additionally, there are concerns over the elevated valuations in financial markets. Upside potential includes a milder tariff impact on economic activity and pro-growth policies in major economies.
- Publication: Quarterly Bulletin Third Quarter 2025
- Press Conference Slides
- Press Conference Presentation Transcript
- Press Conference Video
Bank Negara Malaysia
14 November 2025
© Bank Negara Malaysia, 2025. All rights reserved.
Source: Bank Negara Malaysia
Disclaimer
The information provided in this report is of a general nature and has been prepared for information purposes only. It is not intended to constitute research or as advice for any investor. The information in this report is not and should not be construed or considered as an offer, recommendation or solicitation for investments. Investors are advised to make their own independent evaluation of the information contained in this report, consider their own individual investment objectives, financial situation and particular needs and should seek appropriate personalised financial advice from a qualified professional to suit individual circumstances and risk profile. The information contained in this report is prepared from data believed to be correct and reliable at the time of issuance of this report. While every effort is made to ensure the information is up-to-date and correct, Bond and Sukuk Information Platform Sdn Bhd (“the Company”) does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information contained in this report and accordingly, neither the Company nor any of its affiliates nor its related persons shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof.
YOU MAY ALSO LIKE
TUTORIAL
Nov 14, 2025
|
6 min read
ARTICLE
Nov 06, 2025
|
4 min read
ARTICLE
Oct 31, 2025
|
11 min read
ARTICLE
Sep 04, 2025
|
4 min read