Gross domestic product (GDP) rose 4.4% in the January-March period from a year earlier, according to advance estimates from the statistics department today.
That’s below the 4.8% median estimate in a Bloomberg News survey and marks a third straight quarter of slower growth.
The mining and quarrying sector shrank 4.9% as production fell.
The disappointing data comes as policymakers review the official 4.5%-5.5% growth forecast for 2025 on uncertainty over global trade.
Malaysia was hit with a 24% US import tariff before President Donald Trump temporarily pared it back to 10% for 90 days while hiking levies for China.
The services industry remained the main driver of growth in Q1, expanding by 5.2%, according to a statement from the agency, which described the economy’s overall performance in positive terms.
“Malaysia’s GDP growth held firm amid persistent global headwinds, underpinned by resilient domestic fundamentals,” chief statistician Uzir Mahidin said in a statement.
But the pace of services growth was also slower than in the previous quarter, and analysts are increasingly betting that Bank Negara Malaysia (BNM) may cut rates to stimulate growth, even as the central bank said it would look beyond monetary policy to deal with the tariff fallout.
BNM is likely to hold rates unless growth falls toward 3%” in the second half of the year, which would increase the case for easing, according to an April 14 report from Kenanga Investment Bank Bhd.
The central bank last adjusted borrowing costs in May 2023, with a 25-basis-point hike.
Among Southeast Asian neighbours, the Philippines cut rates by 25 basis points on April 10 and Singapore, which uses the exchange rate as its main policy tool, eased its monetary policy settings on April 14.
Both central banks noted uncertainties over world trade.
Malaysia remains one of the region’s fastest-growing economies, with expansions of 5.4% and 5% year-on-year in the third and fourth quarter of 2024, respectively, from a peak of 5.9% in the April-June period.
That brought 2024 GDP growth to 5.1%, within the government’s official forecast and above 2023’s performance, when tepid global demand hurt exports and manufacturing activity.
“Seasonal events such as Chinese New Year celebrations, preparations for Ramadan and the reopening of the school year helped keep overall economic activities on a positive track,” the statistics agency said.
“Additionally, the labour market remained favourable, marked by a continued rise in employment and a stable unemployment rate of 3.1%,” it said.
However, the outlook has been clouded by Trump’s trade policies.
“Malaysia is working to engage with the US to reduce tariff rates and expand the list of exemptions for its exports to reduce the negative impact on the economy,” investment, trade and industry minister Zafrul Aziz said on Monday.
Like its regional peers, the country has pledged not to retaliate with its own levies.
On Wednesday, China reported faster-than-expected GDP growth of 5.4% for Q1, two days after its March exports surged 12.4% in dollar terms from a year earlier.
The data may signal buyers were frontloading shipments before Trump’s tariffs, which would imply a slowdown as the US trade levies take effect.