KUALA LUMPUR (April 10): Bank Negara Malaysia (BNM) is not in a hurry to revise its 2025 growth forecast of 4.5% to 5.5% for Malaysia's gross domestic product (GDP), despite the tariff upheaval initiated by US President Donald Trump.
This is because the central bank had already factored in the potential tariff impact of the new Trump administration when it first made the projection, according to BNM governor Datuk Seri Abdul Rasheed Ghaffour.
That said, Abdul Rashed said the country's projected GDP growth range is under review, because the 24% tariff announced on Malaysian exports to the US was higher than anticipated.
“When we came up with the 4.5% to 5.5% range in the annual report, we actually took into account some potential impact of this tariff announcement,” Abdul Rasheed told reporters following the Asean Investment Conference 2025 on Thursday.
“But the size of the tariff was huge. It’s bigger than we expected. It’s bigger than what others globally expected as well,” he said. “So, based on that, surely there will be some impact in terms of our growth range.”
Nevertheless, Abdul Rasheed maintained that BNM will await clearer information on the tariff situation before making any changes to its GDP growth projection.
“It is under review at the moment, but we are not going to be in a rush to change the range at this point in time, because there is no certainty. Let’s wait for things to settle down,” he said. “Once we are clear in terms of what parameters are affecting our growth range, then we will make the adjustment.”
Malaysia entering tariff tension from 'position of strength'
Abdul Rasheed stressed that Malaysia is entering the current global trade tensions from a strong position. He highlighted that the country’s economic fundamentals remain sound, supported by strong consumption and robust domestic investment.
“Last year, we grew by 5.1%. We are in the 5% club,” he said. “This is supported by a lot of key drivers. Consumption is definitely one. And don’t forget, we have investment as well.”
He also pointed out that the investment environment is increasingly driven by high-quality domestic direct investment, which is strengthened by strong domestic linkages and private-sector participation.
While acknowledging that Malaysia’s exports will be affected by the tariffs, the governor remains optimistic about the overall impact, particularly due to Malaysia’s significant electrical and electronics (E&E) and semiconductor exports.
“Exports would be affected. But again, when you look at Malaysia’s exports, mainly they are E&E and semiconductors,” he said. "It might come down, but it will not tank, because the demand for AI (artificial intelligence), the demand for digitalisation, will always be there.”
In 2024, Malaysia's economy grew by 5.1%, which was at the higher end of official projections of 4.8% to 5.3%. This was also significantly better than the 3.6% growth recorded in 2023.
Generally, economists expect a moderation in GDP growth for 2025 despite the country's solid 2024 performance, as external uncertainties and slower investment momentum weigh on prospects.
Hence, domestic demand will play an even more crucial role in sustaining economic momentum, economists have noted, especially given that GDP growth slowed for the second consecutive quarter in the fourth quarter of 2024, expanding by 5% year-on-year.
The third quarter of 2024 recorded a GDP growth of 5.4%, compared with 5.9% in the second quarter and 4.2% in the first quarter.