Revised GDP Growth Forecast Reflects Malaysia's Economic Realities -- Economist
By Harizah Hanim Mohamed
KUALA LUMPUR, July 28 (Bernama) – The revised projection for Malaysia's GDP growth in 2025 by Bank Negara Malaysia (BNM) is a realistic forecast that aligns with the economy's underlying growth potential, said economist Professor Geoffrey Williams.
The central bank has revised Malaysia's 2025 GDP growth projection to between 4.0 per cent and 4.8 per cent, down from its earlier projection of 4.5 per cent to 5.5 per cent. BNM's projection takes into account various tariff scenarios, ranging from continued elevation of tariffs to more favourable trade negotiation outcomes.
Williams attributed the revision of the growth forecast to uncertainties surrounding the United States government's tariffs.
'However, from a local perspective, domestic demand remains strong and is expected to benefit from a lower Overnight Policy Rate (OPR) and the one-off RM100 cash handout for all citizens aged 18 and above, which is part of Prime Minister Anwar Ibrahim's series of economic measures.
'Although Malaysia's total trade and exports have been strong, it is net trade that matters for growth, and this has been squeezed by front-loading and volatility due to the delayed tariff negotiations,' he told Bernama when contacted.
Williams pointed out that the downgrade in growth expectations was anticipated and widely communicated. The central forecast now stands at approximately 4.5 per cent, down from the previous forecast range of 4.5 to 5.5 per cent.
'The original forecast was optimistic even under normal circumstances, without the downside risk posed by the tariff negotiations. There are no significant concerns about growth potential, except for the direct effects of tariffs on Malaysia and major regional markets,' he added.
Asked about the impact of the revised GDP forecast on job creation, household spending, and investor confidence, Williams said he expects the unemployment rate to remain low, job creation will continue as normal, and investor confidence to stay relatively unaffected.
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