Economy can withstand tariffs
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.
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