2 weeks Ago
KUALA LUMPUR, April 18 — Malaysia’s economy is forecast to grow by 4.5 per cent in 2025, although growth could slow to between 3.5 per cent and four per cent if trade tensions escalate, said RHB Investment Bank Bhd (RHB IB).
In a note, RHB IB said Malaysia’s economic outlook is becoming increasingly fluid, influenced by global developments in global tariffs and trade relations. “We expect increased challenges for the trade and manufacturing sectors, particularly from the second quarter of 2025 onwards, as trade tensions intensify. “The 10 per cent United States (US) tariff on Malaysian exports could reduce gross domestic product (GDP) by 0.
1 per cent,” it said. Additionally, it said that expanded US tariffs on China and a slowdown in China’s GDP could cause a further downside of one per cent to 1.5 per cent for Malaysia’s GDP.
RHB IB also noted that if tariffs rise to 24 per cent after the 90-day pause, Malaysia could face an additional GDP contraction of between 0.2 per cent and 0.4 per cent on top of the 10 per cent downside.
However, the bank pointed out that the domestic economy has demonstrated resilience, driven by robust consumer spending and steady investment, which could help cushion Malaysia against some risks arising from heightened tariffs and trade tensions. “Strategic initiatives under the Economy Madani framework, including the National Energy Transition Roadmap and the New Industrial Master Plan 2030, are set to stimulate investment flows over the medium term. “Public sector investment is projected to accelerate as key projects progress towards the final year of the 12th Malaysia Plan.
The services sector will benefit from an expanding labour market and rising household incomes,” it said. RHB IB added that private consumption is expected to remain strong, supported by wage growth, higher minimum wages, and adjustments to civil service salaries. Meanwhile, MIDF Amanah Investment Bhd expects Malaysia’s GDP growth to moderate to four per cent this year.
“We forecast Malaysia’s GDP will experience a more moderate growth this year compared to 2024’s 5.1 per cent, driven by sustained domestic spending,” it said. MIDF Amanah opined that Malaysia could still sustain growth even if the intensified trade tensions further weaken the external trade outlook, as domestic consumption is expected to remain resilient, supported by positive labour market conditions, rising income, continued cash assistance programmes from the government, and increased tourist spending.
— Bernama.
