HLIB Research said growth is expected to be driven by a robust recovery in mining sector, stronger growth in manufacturing activity, as well as sustained expansion in the services and construction sectors.
PETALING JAYA: Economic growth for the third quarter (3Q) of this year is anticipated to accelerate, buoyed by stronger industrial output, a rebound in mining activity and resilient domestic demand, say economists.
Analysts expect the upcoming gross domestic product (GDP) print to show a notable improvement from the previous quarter, signalling the continuation of the country’s post-pandemic recovery momentum.
Hong Leong Investment Bank Research (HLIB Research) said 3Q25 GDP growth could come in at 5.2% year-on-year (y-o-y), higher than the 4.4% recorded in the previous quarter.
“Growth is expected to be driven by a robust recovery in mining sector, stronger growth in manufacturing activity, as well as sustained expansion in the services and construction sectors,” it said, noting that the forecast was consistent with the Statistics Department’s advance estimate and consensus expectations.
HLIB Research said the rebound in mining was mainly attributed to the recovery in both natural gas and crude petroleum production, partly aided by low base effect.
It added that manufacturing activity remained firm, with an uptick in the industrial production index at 4% y-o-y, underpinned by stronger export-oriented output amid sustained global demand for electrical and electronics goods and potential increased frontloading activity.
The services sector was also expected to maintain expansion, led by “stronger wholesale and retail trade, food, beverage, accommodation and other services, bolstered by the RM100 SARA cash aid disbursement.”
MBSB Research offered a similar view, forecasting 3Q25 GDP growth of around 5.1% y-o-y, slightly below the advance estimate of 5.2%.
“The slight downward revision from the advance estimate will mainly reflect the moderation in the services sector growth,” it said.
The research house added that the more robust growth was also attributable to more encouraging external trade (that is, improved export performance) on the back of front-loading activities and reduced uncertainties following the trade negotiations with the United States.
It attributed the stronger performance to resilient domestic demand and favourable labour market conditions.
“Domestic spending activities continue to expand, underpinned by healthy labour market conditions, cash transfers from the government, manageable inflationary pressures and increased tourist arrivals,” it said.
Retail trade rose by 5.9% y-o-y, supported by steady employment growth and the lowest unemployment rate in a decade at 3%.
“Inflation remained manageable albeit the headline still averaging at up 1.3% y-o-y. The underlying demand pressures remained stable and under control,” it noted.
The research house also highlighted a sharp turnaround in external trade performance.
