KUALA LUMPUR (Oct 17): Malaysia’s economy expanded faster than expected in the third quarter as domestic demand, its main growth engine, continued to hum while exports chugged on, official flash estimates show. 

Gross domestic product (GDP) rose 5.2% in July-September when compared to the same quarter last year, the Department of Statistics Malaysia (DOSM) said in a statement on Friday. The rate is higher than the median 4.2% rise predicted in a Bloomberg poll and the second quarter’s 4.4% year-on-year growth.

Tourism activities during public and school holidays powered domestic demand, while sustained capital investment and rising external demand further bolstered economic expansion, despite headwinds from uncertain trade policies, said chief statistician Datuk Seri Dr Mohd Uzir Mahidin.

The services sector, which accounts for more than half of the economic output, grew steadily at 5.1% in the third quarter amid tourism activities during public and school holidays, bolstered by government cash aid and interest rate cut.

Growth of the manufacturing sector picked up to 4.0% in the recently ended quarter from 3.7% in the second quarter, mainly supported by electrical, electronic and optical products, as well as vegetable and animal oils and fats, and food processing.

The construction sector moderated, growing at 11.2% versus 12.1% in the preceding quarter, led by civil engineering and specialised construction activities.

The agriculture sector, however, grew more slowly at 0.4% compared to 2.1% in the second quarter, dragged by contraction in the oil palm and rubber sub-sector while the mining and quarrying sector rebounded 10.9% from a 5.2% decline, driven by natural gas, crude oil, and condensate.

Overall, “economic momentum in Malaysia strengthened in the third quarter of 2025, underpinned by solid performance in all main sectors,” Mohd Uzir added.

The detailed and comprehensive analysis for third-quarter GDP data will be released on Nov 15.