TA Research maintained its 2025 gross domestic product growth forecast at 4.4%.
PETALING JAYA: The country’s economic outlook remains anchored on resilient household spending, which analysts believe will continue cushioning the economy against global trade uncertainties.
Both TA Research and BIMB Research highlight strong consumer fundamentals, aided by fiscal support and monetary easing, as key drivers for the second half of this year (2H25).
TA Research reiterated its view that “private consumption will remain the key anchor of growth in 2H25”, underpinned by a robust labour market, lower fuel prices and the July interest rate cut.
Similarly, BIMB Research observed that consumer demand is expected to remain steady in the months ahead, underpinned by firm domestic fundamentals and supportive policy measures.
The consensus is that domestic demand will help Malaysia navigate a challenging external environment marked by softer global trade and heightened US tariffs.
TA Research maintained its 2025 gross domestic product (GDP) growth forecast at 4.4%, driven by personal spending growth of 5.7% and a steady services sector expansion of 5.2%.
BIMB Research, meanwhile, projects distributive trade growth at 5.2% for the year, with retail trade accelerating to 6.6%.
The latest data from July underscore this resilience, as Malaysia’s distributive trade sales rose 5% year-on-year (y-o-y) to RM156.4bil, while on a monthly basis, trade value jumped 2.3%, with trade volume also climbing 1.9%.
Wholesale trade, which accounts for nearly 45% of distributive trade, expanded 5.9% y-o-y to RM70.1bil, while retail trade grew 4.4% y-o-y to RM67bil.
Motor vehicle sales, often a volatile segment, rebounded 0.9% y-o-y in July with a strong 12.9% month-on-month surge.
BIMB Research observed that the improvement was broad-based across all major components, with retail trade rising 5.6%, wholesale trade 5.4%, and motor vehicle sales rebounding sharply by 1.6%.
Concurrently, policy measures are expected to sustain momentum into the second half, with both research houses pointing to the universal RM100 cash transfer from the goverment, which injected RM2.2bil into the economy in July, as a short-term boost.
TA Research highlighted that “much of this money is likely to be spent almost immediately on daily needs such as food, transport, and small retail purchases”.
In addition, fuel price adjustments are anticipated to further lift household disposable income, with BIMB Research expecting the reduction of prices for RON95 petrol to RM1.99 per litre by end-September, coupled with the overnight policy rate (OPR) cut to 2.75%, to reinforce consumer spending, particularly among lower and middle-income households.
Tourism is also another key pillar of domestic demand, with Malaysia welcoming 12.9 million foreign tourists in 1H25, an 8.8% y-o-y increase, bringing arrivals to 96.2% of pre-pandemic levels.
Arrivals from China surged 35.6% to 2.18 million, while visitors from India jumped 26.6% to 808,000.
Singapore remained the largest source market, contributing over 10 million arrivals, up 22.5%.
BIMB Research said the sector’s outlook remains robust, supported by rising demand across leisure, medical, and business-travel segments, noting that China and India have grown their market share to record highs.
Despite the upbeat domestic picture, both research houses flagged downside risks, primarily the planned rollout of a targeted RON95 fuel subsidy in the fourth quarter which could dampen consumer sentiment if not managed carefully.
“Nonetheless, a well-calibrated and gradual rollout, supported by continued targeted cash assistance, steady wage growth, and a resilient labour market, should help cushion the impact,” BIMB Research said.
At the same time, weaker exports, escalating tariff tensions between the United States and China, and slowing global consumption trends may weigh on Malaysia’s trade-linked sectors.
TA Research cautioned that the strength in domestic demand will help mitigate the drag from weaker external conditions, particularly the risk of slower export growth amid heightened US tariffs and global trade uncertainties.
Overall, Malaysia’s economic outlook remains positive, supported by firm household spending, recovering tourism, and targeted policy support.
TA Research said it sees domestic demand as the anchor for growth, while BIMB Research expects further upside potential supported by additional fiscal measures such as cash transfers and the reduction in RON95 fuel prices.
