KUALA LUMPUR: RHB Investment Bank Bhd (RHB IB) is maintaining its final estimate of Malaysia’s gross domestic product (GDP) growth for the third quarter at 5.2 per cent year-on-year (y-o-y), supported by sustained momentum in the manufacturing sector and a rebound in export performance in September.
The bank said it is also considering an upward revision to its full-year 2025 GDP forecast to 4.5 per cent, in line with stronger economic indicators.
"Given the stronger-than-expected year-to-date industrial production index (IPI) performance, recovery in mining output, and improvement in external trade, we have revised our full-year IPI projection upward to 3.6 per cent y-o-y from 3.2 per cent previously, compared to the current year-to-date growth of 3.1 per cent y-o-y,” it said in its Global Economics & Market Strategy report today.
RHB IB stated that the manufacturing sector is expected to receive near-term support from sustained strength in domestic-oriented industries, easing tariff-related risks, continued resilience in electrical and electronics (E&E) exports, and steady investment activities.
On the external front, it said the outlook remains constructive, supported by Malaysia’s diversified product base and export destinations, broadly comparable United States tariff rates across ASEAN, limited near-term risks from potential US semiconductor tariffs, and improved clarity on reciprocal trade policies following the conclusion of the US-Malaysia Agreement on Reciprocal Trade (ART).
"The ART’s conclusion is expected to lift manufacturing sentiment and further support sectoral activity, underpinned by Malaysia’s expanded exclusion from US tariff measures under Annex III of Executive Order 14346,” it said.
Meanwhile, RHB IB said domestic demand continues to play a stabilising role for the manufacturing sector.
It opined that robust private consumption, supported by steady employment, rising wages, and ongoing investment, sustains production levels amid external headwinds.
The bank elaborated that domestically oriented industries, particularly those in the food and beverage and consumer goods sectors, continue to benefit from resilient local orders, which cushion the impact of softer external demand.
"Looking ahead, we will closely monitor sectoral developments, particularly in semiconductors, given their critical role in Malaysia’s export portfolio.
"While uncertainty remains over potential US tariffs on semiconductor products, the near-term risk appears limited,” it said.
Approximately 65 per cent of Malaysia’s semiconductor exports to the US are produced by American firms based locally, indicating deep supply chain integration and a greater probability of tariff exemptions, thereby reducing potential tariff risks.
"Despite lingering policy uncertainty, sustained global semiconductor demand driven by AI and other emerging technologies remains a key tailwind for Malaysia, alongside its diversified export destinations,” RHB IB added. - Bernama
