Bank Negara Malaysia (BNM) governor Abdul Rasheed Ghaffour also attributed the growth to continued export growth supported by electrical and electronic exports and tourism activity, which offset a decline in mining exports.
“Overall investment grew by 9.7% in the first quarter. We expect this momentum to continue, backed by the progress of multi-year projects in both the private and public sectors, despite rising global uncertainties,” he told a press conference here today.
The figure aligns with the 4.4% projection by the statistics department in April. In the corresponding quarter last year, the country recorded a growth rate of 4.2%.
Rasheed warned that tariffs introduced by US president Donald Trump’s administration will negatively affect Malaysia’s exports directly through reduced US demand and indirectly through slower global growth among key trading partners.
“As a small and open economy, Malaysia will inevitably face both direct and indirect impacts from these tariffs.
“As a result, economic growth is expected to be slightly below the earlier forecast of 4.5% to 5.5% for 2025.
“The new official growth forecast will be released in the near future once there is greater visibility in these factors,” he said.
BNM had previously announced its 2025 economic growth forecast of 4.5% to 5.5% on March 24, 2025.
Rasheed noted that certain factors could cushion the near-term impact of tariffs, including the front-loading of exports to the US during the 90-day tariff pause period.
“Additionally, 32% of Malaysia’s exports to the US are exempt from tariffs, including key products such as semiconductors.
“Our exports also tend to be inelastic, meaning the quantity demanded is unlikely to change significantly in the short term, even if prices rise due to tariffs,” he said.
According to Rasheed, these products include electrical machinery, computer hardware, and optical and scientific equipment.
On April 2, 2025, Trump imposed steep reciprocal tariffs on numerous countries. On April 9, he announced a 90-day pause on tariffs above 10% for most countries, except China.
Rasheed added that both headline and core inflation remained moderate in Q1 2025, with headline inflation easing to 1.5% while core inflation edged up to 1.9%.
As for the ringgit, the central bank said the currency appreciated by 0.8% against the US dollar, with the ringgit nominal effective exchange rate rising by 0.01%.