KUALA LUMPUR (April 15): Malaysia can still weather the trade shocks from the US with relative resilience, aided by strong fundamentals, investment momentum, and strategic positioning in the global semiconductor supply chain — even as the broader Asean+3 region is expected to face its weakest growth outlook since the Covid-19 pandemic.

According to the Asean+3 Macroeconomic Research Office’s (AMRO) Regional Economic Outlook 2025 report, while the US tariffs announced on April 2 — which are currently put on hold on most nations except China— tilted to the downside risks, Malaysia’s diversified economic base and moderate exposure to the US market offer some "degree of insulation".

“Malaysia has been doing very well in attracting investment recently because it has a very strong electronics and semiconductor cluster,” said Amro's chief economist Hoe Ee Khor during a virtual press conference on Tuesday.

"[For example] Intel has been there since the 1970s, and more recently, the country has been attracting data centres and cloud infrastructure as it moves up the value chain [by paying Arm Holdings plc US$250 million (RM1.1 billion) over 10 years for semiconductor-related licences and know-how]," he added.

The semiconductor sector — one of the few exempted goods from the US' new tariffs as of now — is expected to continue supporting Malaysia’s growth trajectory.

“This exemption has effectively softened the blow, compared to more affected sectors like furniture and low value-added manufacturing,” Khor noted.

Malaysia’s real GDP growth is expected to remain steady in 2025 at 4.7%, a slightly moderated pace amid the global trade headwinds and ease slightly to 4.5% in 2026, according to the report.

The overall Asean+3 growth is forecast to slow to just above 4% in 2025, from 4.3% in 2024, with the risk of dipping below 4% under the worst-case scenario modelled by the research institution.

The new US tariff regime, which has been described as a “massive shock” by Amro, imposes an average rate of 28% on Asean+3 member economies—higher than the rates applied to India or the EU.

While Malaysia is not among the most exposed in relative terms, key non-tech industries, particularly furniture and other manufacturing exports, are likely to face challenges, it noted.

“Some industries are already scrambling to ship their products out before the full tariffs take effect,” said Khor. “However, the economy is flexible, and with proper support and policy measures, these sectors can restructure.”