Malaysia's economy holds steady amid global uncertainty: DOSM

The employment-to-population ratio improved to 68.5% in February 2025, and the Labour Force Participation Rate edged up to 70.7%, reflecting stronger market inclusivity.

"Malaysia’s economic outlook remains one of resilience, adaptation, and opportunity," shared Chief Statistician of Malaysia Dato’ Sri Dr. Mohd Uzir Mahidin in the fourth edition of the Malaysian Economic Statistics Review.  

With the country's advanced Gross Domestic Product (GDP) estimating a 4.4% growth in Malaysia’s economy in the first quarter of this year, and despite external challenges such as the impact of the US tariffs and global trade uncertainties, the Review highlighted that Malaysia’s diversified economy, commitment to innovation, and strategic government policies will continue to serve as key pillars of economic stability.

The annual performance of the Leading Index (LI) registered 112.4 points in February 2025, reflecting a marginal decline of 0.004 points, primarily attributable to a substantial contraction in the 'number of housing units approved' (-34.5%). In terms of monthly performance, the LI recorded a decline of 0.2% in February 2025, indicating modest negative as compared to the previous month (January 2025: -1.1%).

This was primarily bolstered by a 0.5% increase in real imports of semiconductors. Looking at the smoothed long-term trend in February 2025, the LI remained below 100.0 points. Nevertheless, Malaysia’s economy is expected to remain moderate supported by strong economic fundamentals despite facing global uncertainties, leading to complex spillover effects.

Labour market performance in early 2025

Steady employment growth: As of February 2025, Malaysia’s employment rose to 16.73mn, up from 16.26mn a year earlier. The employment-to-population ratio improved to 68.5%, and the Labour Force Participation Rate (LFPR) edged up to 70.7%, reflecting stronger market inclusivity.

Resilient labour force composition: The labour force grew to 17.27mn, with employees making up 75.2% and own-account workers — often in informal or freelance roles — comprising 20.8%. The number of those temporarily not working declined to 85,400, a 4.3% monthly drop.

Unemployment holds steady: The unemployment rate remained at 3.1%, with the number of unemployed dropping from 556,900 (Feb 2024) to 532,800 (Feb 2025). Most jobseekers were actively looking (79.3%), and short-term unemployment dominated, with 63.7% jobless for under three months.

Youth unemployment remains a concern: Despite improvement, youth unemployment is still high. 298,900 youths (15–24) were unemployed in February, while the unemployment rate for those aged 15–30 stood at 6.3%, down from 6.9% the year before — still double the national average.

People outside the workforce: Around 7.15mn Malaysians remained outside of the labour force in February, with household duties (43.7%) and education (41.6%) being key reasons. This group grew 1.6% year-on-year, suggesting many remain disengaged due to non-economic factors.

Looking ahead, with GDP projected to grow 4.5–5.5% in 2025, supported by infrastructure and domestic demand, and inflation expected at 2.0–3.5%, government initiatives — such as minimum wage hikes and education investments — are expected to further boost employment and address labour market gaps.

On a whole, the Department of Statistics Malaysia believes that the country’s economy is on track to the project growth numbers above, driven by strong domestic demand, ongoing infrastructure projects, and improving global conditions. Inflation is expected to stay moderate at 2% to 3.5%.

At the same time, key policy moves — such as minimum wage adjustments, civil servant salary reviews, and investments in education and workforce development under the 12^th Malaysia Plan —are set to spur job creation and promote a more inclusive labour market for the country. While these efforts support long-term competitiveness and resilience, global uncertainties remain a downside risk to growth.

READ MORE: Malaysia’s labour market shows steady growth: 16.73mn employed as of February 2025 

Lead image / DOSM