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Supported by key sectors, the country's growth was underpinned by services and manufacturing, while on the demand side, private consumption and gross fixed capital formation (GFCF) were the main drivers.
Stable domestic demand and resilient key sectors have helped drive Malaysia’s economic growth in 2025, even as the country navigates global challenges and ongoing external trade fluctuations, as revealed in the Department of Statistics' Malaysian Economic Statistics Review (MESR), Volume 9/2025 on 30 September 2025.
According to Chief Statistician Malaysia, Dato’ Sri Dr. Mohd Uzir Mahidin, "Malaysia’s economy expanded by 4.4% in the first half of 2025 (1H 2024: 5.0%), aligning with the government’s forecast of 4.0 to 4.8% for the year. Supported by key sectors, Malaysia’s growth was underpinned by services and manufacturing, while on the demand side, private consumption and gross fixed capital formation (GFCF) were the main drivers.”
Labour market
On the labour market front, the Chief Statistician highlighted that Malaysia’s labour force grew 2.8% year-on-year to 17.47mn persons (July 2024: 17.00 million), while the Labour Force Participation Rate (LFPR) remained steady at 70.8%. Employment continued to rise, with the number of employed persons increasing 3.1% to 16.95mn, lifting the employment-to-population ratio to 68.7%.
Meanwhile, unemployment declined with 521,600 persons unemployed, down 5.7% year-on-year, bringing the unemployment rate to 3.0%. On a month-on-month basis, the labour force expanded 0.2% (June 2025: 17.43mn), while employment also increased 0.2% (June 2025: 16.92mn), indicating continued stability in Malaysia’s labour market.
Production
Narrowing down to production performance, natural rubber (NR) production decreased by 5.5% year-on-year in July 2025 to 35,884 tonnes (July 2024: 37,960 tonnes). The fresh fruit bunches production in August 2025 registered a decline of 3.1% year-on-year to 9,524,839 tonnes (August 2024: 9,833,812 tonnes).
Momentum in the manufacturing sector continues, with total sales value rising 3.5% year-on-year in July 2025 (June: 3.3%), reaching RM162.5bn, reflecting sustained domestic demand and gradual industrial recovery. At the forefront of growth, the food, beverages & tobacco sub-sector expanded 8.9% (June: 14.7%), driven by strong consumer demand for essential goods.
Following Malaysia’s steady GDP growth, the Industrial Production Index (IPI) rose by 4.2% in July 2025, up from 2.9% in June. The manufacturing sector led the expansion at 4.4% (June: 3.6%), supported by a rebound in the mining sector at 4.3% (June: -0.01%), while the electricity sector recorded a slower increase of 1.6% (June: 2.3%). On a month-on-month basis, however, the IPI contracted by 0.3%, offsetting the strong 7.5% growth observed in June.
Growth was also supported by electrical & electronics products which increased 6.9% (June: 4.5%), reflecting both domestic and export market strength, and non-metallic mineral, basic metal & fabricated metal products at 3.8% (June: 3.0%), highlighting steady industrial production. Reflecting steady demand, on a month-on-month basis, overall sales edged up 0.8% from RM161.2bn in June 2025, signalling stable consumption patterns.
Taking a broader view of Malaysia’s services sector, total sales in wholesale & retail trade reached RM156.4bn in July 2025, marking a 5.0% year-on-year increase. Leading the momentum, wholesale trade recorded RM70.1bn in sales, up RM3.6bn from the previous year, reflecting 5.4% growth.
Meanwhile, retail trade contributed strongly, with total sales of RM67.0bn, an increase of RM3.5bn, or 5.6% year-on-year. Supporting overall growth, the motor vehicles sub-sector posted RM19.3 bn in sales, rising RM0.3bn, representing 1.6% growth compared to July 2024.
The combined performance of these sub-sectors highlights the resilience and steady expansion of Malaysia’s services sector, underpinned by consumer demand and sustained commercial activity.
Natural rubber (NR) production decreased by 5.5% year-on-year in July 2025 to 35,884 tonnes (July 2024: 37,960 tonnes). The fresh fruit bunches production in August 2025 registered a decline of 3.1% year-on-year to 9,524,839 tonnes (August 2024: 9,833,812 tonnes).
External sector
Highlighting Malaysia’s external trade trends, Malaysia’s trade performance rebounded in July 2025, underpinned by strong exports, which grew 6.8% year-on-year. Correspondingly, imports also rose, albeit at a slower pace, increasing 0.6% annually. As a result, total trade climbed to RM265.9bn in July 2025, compared to RM256.2bn in July 2024.
On a month-on-month basis, exports, imports, total trade, and trade surplus recorded encouraging growth of 15.5%, 10.9%, 13.3%, and 78.%, respectively. Turning to August 2025, the trade performance of Malaysia declined by 1.9% year-on-year. Nevertheless, exports remained on an upward trajectory, increasing 1.9%, while imports fell 5.9%.
Consequently, the trade balance recorded a substantial surplus of RM16.1bn, up 153.8% from the same period last year. On a month-on-month comparison, exports contracted 6.3%, imports decreased 8.0%, and total trade declined 7.1%, while the trade surplus expanded by 7.7%, reflecting continued resilience amid external market fluctuations.
Prices
From a price perspective, Malaysia’s inflation edged up to 1.2% year-on-year in July 2025 (June: 1.1%), driven mainly by higher costs in insurance & financial Services (5.5%), restaurants & accommodation services (3.1%), and transport (0.4%), while food & beverages recorded a slower rise at 1.9%(June: 2.1%).
On a month-on-month basis, headline inflation rose 0.1%, maintaining the same rate as in June. Meanwhile, in August 2025, Malaysia’s inflation increased 1.3%, with the index standing at 134.9 points.
READ MORE: Malaysia records upward trend in median monthly salaries, reaching RM2,793 in 2024
Lead image / DOSM Facebook
Infographics / DOSM
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