Malaysia's investment growth to ease, BMI warns
KUALA LUMPUR: Malaysia's strong investment momentum in recent years is likely to ease, according to a report by BMI, a Fitch Solutions company.
Signaling a more subdued outlook, the latest Business Tendency Survey showed the confidence indicator among manufacturers slipping to just 0.3 per cent year-on-year in Q1 2025—the lowest level recorded in 18 months. The decline points to growing business caution amid expectations of a more challenging economic environment.
"This aligns with our view that the rapid growth in investment in recent years is not likely to continue, a key reason underpinning the downward revision to our 2025 real GDP growth forecast from 4.7 per cent to 4.2 per cent," it said.
The firm noted that Bank Negara Malaysia's decision to hold the overnight policy rate (OPR) at 3.0 per cent was in line with what it expected.
It also said that the latest policy statement was relatively similar to the last, particularly with respect to forward guidance.
"Among others, the central bank attributed downside risks to growth to "weaker sentiment amid higher uncertainties affecting spending and investments", a phrase notably absent from previous statements. We believe this refers to US tariff policy.
"We continue to expect the bank to leave the OPR on hold at 3.0 per cent through 2025."
Looking ahead, the firm expects oil prices to average US$68 per barrel in 2025, down from US$76 per barrel previously, which will keep a lid on headline inflation.
It added that slowing economic growth in the US and China will weigh on domestic consumption.
"These inform our view that inflation will probably average 2.1 per cent in 2025, down from 2.4 per cent previously. However, the impact of the RON95 subsidy rationalisation plan, details of which remain scant, could pose upside risks to this view."
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