Economy can withstand tariffs
Published on: Monday, May 05, 2025
Published on: Mon, May 05, 2025
By: David Thien Text Size: Dr Choy acknowledged that Malaysian consumer spending has dropped, accompanied with higher external demand, as Malaysia's manufacturing PMI declines by a margin. Kota Kinabalu: Sabah and Malaysia are not expected to be impacted drastically this year despite global economic uncertainty due to the tariff regime imposed by United States President Donald Trump. Growth rate is expected to be around 4.4 per cent. This is due to the strength of local economic activities, said Dr Roy Choy Swee Yew, the Chief Economist of MARC Ratings Berhad at the 'Economic & Market Outlook for 2025 and Beyond' session of the Sabah Renewable Energy Conference 2025 at Shangri-La Tanjung Aru Resort, recently. 'Sabah is the largest palm oil producer in Malaysia. Petroleum products and natural gas account for 50 per cent of Sabah's total exports,' Dr Choy said. He noted that currently, the high impact renewable energy projects in Sabah are the RM120 million Seguntor Bioenergy and the RM250 million Tadau Energy Solar Farm which is Malaysia's first green sukuk-financed renewable energy project. No economic crisis is seen for 2025, although the withdrawal of fuel subsidies later in the year may hike inflation temporarily for six months. Bank Negara is expected to maintain the OPR rate for this year, Dr Choy said. On the high impact infrastructure projects in Sabah include the RM40 billion Pan Borneo Highway and the RM7.5 billion Sabah–Sarawak Link Road (SSLR), he said. The high impact agriculture projects in Sabah include the RM33.59 million Land optimisation and Agro-Food Development and the activities under the Sabah Agricultural Blueprint 2021 – 2030. Dr Choy acknowledged that Malaysian consumer spending has dropped, accompanied with higher external demand, as Malaysia's manufacturing PMI declines by a margin. There is a broad-based increase in manufacturing exports. 'Domestic economic growth remains resilient despite a weaker external environment,' he said, adding that: 'Malaysia's inflation is expected to remain anchored following Trump's tariff announcements.' 'Central banks are adopting a more dovish stance, with plans to implement further interest rate cuts,' Dr Choy revealed. He foresees global economic growth is projected to reach 2.8 per cent in 2025, as global inflation is cooling. 'However, global trade flows and inflation dynamics remain vulnerable to U.S. tariffs. Trump's new tariffs also target the trade imbalance with Asean,' Dr Choy said, as Malaysia chairs the organisation this year. 'Financial market uncertainties rise amid heightened trade wars. Bond market retreated following the U.S. treasuries sell off as tariff hike on pause,' he said. Malaysia is going to introduce a carbon tax by 2026. 'Markets are pricing in a dovish Federal Reserve path, likely in response to expectations of slowing inflation and recession fears. Year-to-date, our ringgit has held up well. 'Persistent foreign outflows from Malaysia's bond and equity markets reflect waning investor confidence,' Dr Choy said. * Follow us on Instagram and join our Telegram and/or WhatsApp channel(s) for the latest news you don't want to miss. * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available.
Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
39 minutes ago
- The Star
Tariffs tarnishing jeweller's shine
PANDORA, the world's largest jewellery company, is based in Denmark and has nearly 500 stores in the United States, more than any of its other key markets. But in some ways, its real home is Thailand, where the company has been making its products for nearly four decades. Like many global corporations, Pandora's continent-crossing supply chain has allowed it to sell its goods worldwide at a low cost. That supply chain became a grave weakness in April when US President Donald Trump said he would impose 36% tariffs on goods entering the United States from Thailand, alongside steep tariffs on dozens of other countries. After Trump unveiled his 'reciprocal tariffs', Pandora's shares were among the worst performing in Europe. Later, Trump postponed those tariffs until early July, offering a reprieve. But the threat looms, and Alexander Lacik (pic), CEO of Pandora, is not expecting the uncertainty that is paralysing businesses to end. Unless tariffs return to previous levels, the next year will be turbulent, he said in an interview. For now, he added, there is little to do but wait to see how investors, customers and competitors react. 'With the information at hand today, I would be crazy to make big strategic decisions,' Lacik said. Alongside business leaders all over the world, Lacik is grappling with how to respond to Trump's unpredictable policies, which have generated almost maddening uncertainty. Lacik says he is not expecting the uncertainty paralysing businesses to end unless tariffs returned to previous levels. — Jenna Schoenefeld/The New York Times The Trump administration has started to show a willingness to lower tariffs, but his first agreements, with Britain and China, have posed more questions than answers, and tariffs are still higher than they were a couple of months ago. Although some aspects of the trade war have been suspended, Pandora and other multinationals are in limbo, waiting for more agreements to be finalised. Pandora, best known for its silver charm bracelets, has been making jewellery in Thailand since 1989. Across three factories, thousands of people handcraft the products. The company is building a fourth plant in Vietnam, but Trump has also threatened tariffs on Vietnamese goods. Last year, the company sold 113 million pieces of jewellery, about three items every second, making it the largest jewellery brand by volume, with stores in more than 100 countries. A third of Pandora's sales, US$1.4bil, was generated in the United States and Lacik said he had no intention of moving away from the company's most profitable market. But prices will rise, he said, and who will bear the brunt of that is unclear. 'The big question is, am I going to pass on everything to the US consumer, or am I going to peanut butter it out and raise the whole Pandora pricing globally?' Lacik said. Jewellery by Pandora being worn by a model at a promotional event in Los Angeles. — Jenna Schoenefeld/The New York Times But Pandora keeps several months' worth of stock, giving him time to see how other jewellers change their pricing and then decide. A few things can be done immediately, such as streamlining parts of the supply chain. The day after the reciprocal tariffs were announced, Pandora said that it would change its distribution so that products sold in Canada and Latin America would no longer move through the company's distribution hub in Baltimore, a process that would take six to nine months to complete. Moving production into the United States is not being considered, in part because of higher labour costs. Pandora employs nearly 15,000 craftspeople in Thailand and expects to hire 7,000 more in Vietnam. In an earnings report last month, the company estimated the cost of the trade war. If higher tariffs go back into effect, they would cost Pandora US$74mil this year, and then US$135mil annually after that. But the jeweller is not panicking. In fact, the economic curveballs are starting to feel normal, Lacik said. 'We are battle ready,' he added. When he joined the company as the CEO in 2019, Pandora was struggling. Its share price had dropped more than 70% from its peak three years earlier. Lacik instituted a 'complete overhaul', he said, with new branding and store designs, an emphasis on its 'affordable luxury' label and showcasing its complete jewellery line, not just charms. That prepared the company for the trials that hit the global economy next. First, the Covid-19 pandemic, when 15,000 store employees were sent home, and some factory workers slept on cots to keep production going. Then, a surge in inflation risked customers pulling back. Lacik's strategy appeared to be working. In January, Pandora's share price reached a record high. Since then, however, it has dropped more than 20% as it shields itself from some of the trade turmoil. — ©2025 The New York Times Company This article originally appeared in The New York Times
The Star
39 minutes ago
- The Star
Does the US ‘need' Canada?
US President Donald Trump had one big question on his mind as Canadian Prime Minister Mark Carney headed to Washington last month. 'I very much want to work with him, but cannot understand one simple TRUTH,' Trump said in a social media post, reiterating several ways he believes Canada benefits unfairly from its trade relationship with the United States. The president also repeated his incorrect claim that the United States is 'subsidising' Canada to the tune of US$200bil, alluding to the country's trade deficit with Canada, which is the value of what the United States imports minus its exports. In fact, the trade deficit last year was US$63.3bil, according to US data. And if Canada's energy exports were stripped out, it turns into a trade surplus. For Trump, it all boils down to one point: does the United States need Canada? 'We don't need their cars, we don't need their energy, we don't need their lumber, we don't need ANYTHING they have, other than their friendship,' he said in the social media post. But industry groups say differently. The auto industries in Canada and the United States have become highly interconnected over the past three decades – especially between Detroit and Windsor, Ontario, the busiest commercial crossing along the border – as the countries knocked down trade barriers. In 2023, the US imported about 1.24 million vehicles from Canada, the fourth-highest tally behind Mexico, Japan and South Korea. The US is the world's top oil producer, but its refineries rely on crude oil, a variety that Canada specialises in extracting. Retooling US refineries to eliminate the need for crude oil would cost billions and companies are not willing to make those investments, especially because of the uncertainty over Trump's trade policies. Besides oil, Canada in 2023 supplied nearly 100% of the natural gas and 85% of the electrical energy imported by the US, according to Canada's energy regulator. Canada also provides more than one-fourth of the uranium the United States imports to run nuclear reactors, federal data shows, more than any other nation. Howard Lutnick, the US Commerce Secretary, is investigating whether lumber imports are a threat to national security. In 2021, the United States purchased US$28bil worth of lumber from Canada, nearly half of lumber imports. American industry groups have estimated that the tariffs on lumber that Trump has introduced will increase home costs by an average of about US$9,000. For now, the US lumber industry cannot meet the demand from homebuilders, according to a recent analysis by Fastmarkets, and it would take the country at least 10 years to whittle down its need for imported lumber. Farmers this year were reminded of the US agriculture industry's reliance on Canadian imports of key chemical ingredients used in fertiliser, like potassium-rich minerals called potash. The United States imports 85% of its potash from Canada, which is the world's largest exporter of the minerals. But Trump's tariffs on Canada will make potash more expensive for farmers to import and the increases could be passed down to grocery store shoppers, according to the Fertilizer Institute, a US industry group. Trump says the US needs Canada's friendship. Many Canadians say forget about it. The usually warm relationship between the two countries is in tatters, with Canada invoking a defensive tactic used in hockey – 'elbows up' – as its posture against Trump's economic attacks and threats to make Canada a US state. Toronto residents Douglas Bloomfield (right) and son Phoenix holding a Canadian flag and an ice hockey stick in front of the White House as a protest against US tariffs. — AP Canadians have taken to boycotting American-made products and shirking summer travel to the US, with the number of flights scheduled to the country from Canada down by 21%, a New York Times analysis shows. — ©2025 New York Times Company This article originally appeared in The New York Times
BusinessToday
43 minutes ago
- BusinessToday
Today's Shares: Yinson Stock Up 0.85%, Hits RM2.36 Amid RM9 Billion Talk
Yinson Holdings Bhd - FSO (FPSO) Helang Yinson Holdings Bhd's shares rose 0.85% to RM2.36 as of 3.39pm today, following reports of a potential RM9 billion acquisition by US-based infrastructure investor Stonepeak Partners. Trading volume surged to 166.3 million shares, with the stock reaching a high of RM2.44 and a low of RM2.33 during the session. Bloomberg reported that Stonepeak is in exclusive negotiations to acquire the Malaysian energy firm, with CIMB Research estimating the potential deal could value Yinson at approximately RM3.23 per share. This represents a 38% premium over the stock's last closing price and a 10.2% upside from CIMB's target price of RM2.93. Yinson's current market capitalisation stands at around RM6.5 billion. The Lim family, founders of the company, holds a 26.6% stake. Related
