Minor revision of GDP forecast amid resilient fundamentals: Bank Negara governor

New Straits Times

21-05-2025

KUALA LUMPUR: Malaysia's economy remains resilient despite Middle East geopolitical tensions and rising global trade tensions from potential US tariffs.
The reassurance came from Bank Negara Malaysia governor Datuk Seri Abdul Rasheed Ghaffour, who believes that external risks pose only a minimal and manageable threat to the country's economic stability.
He said Malaysia's economic growth forecast for this year is expected to remain largely unchanged, underpinned by the country's strong and diversified economic fundamentals.
"In my view, due to the many factors that can support the country's economic growth, the current projection of 4.5 per cent to 5.5 per cent growth will only shift slightly, InsyaAllah not significantly," he said in an exclusive interview with Buletin TV3 aired tonight.
Earlier, Bank Negara was reportedly reviewing the gross domestic product (GDP) forecast, with an official announcement expected within the next one to two months.
Abdul Rasheed said the International Monetary Fund had revised its global economic growth forecast down from 3.3 per cent to 2.8 per cent, while global trade growth projections were also reduced from 3.2 per cent to just 1.7 per cent.
He said the updated forecast would only be finalised once there is greater clarity on US tariff policies and the outcome of trade negotiations between Malaysia and the world's largest economy.
Diversified Trade Markets Buffer External Uncertainty
Abdul Rasheed said Malaysia stands to benefit from diversified trade markets and products, despite practising an open economic policy.
"No single country in the world accounts for more than 15 per cent of our total trade. Exports to the US contribute only 13.2 per cent.
"Our economy is diverse in terms of trade markets, trading partners and exported products to international markets. This helps mitigate the impact," he added.
The Malaysian economy structure also reflects sectoral diversity, including manufacturing, services, mining and tourism.
Strong Growth in 2024, a Shield Against Global Challenges
Abdul Rasheed said Malaysia is entering a period of global challenges with a strong economic position. In 2024, the national economy grew by 5.1 per cent, driven by robust domestic consumption and encouraging investments.
"Consumption remains strong due to stable household incomes. The unemployment rate in the first quarter of this year was only 3.1 per cent, lower than the 3.3 per cent during the pandemic. When there are jobs and income, people will spend," he explained.
In terms of investment, Malaysia recorded its highest investment in 2024 at RM379 billion, comprising both foreign and domestic investments.
These investments focused on sectors such as electronics, infrastructure and green technology.
"A large portion of electronics exports - around 30 per cent - are not affected by tariffs as they involve semiconductors, machinery and optical instruments, which remain relevant in the digital and AI age," he said.
Government Policy Supports Growth
Abdul Rasheed lauded the government's proactive approach to provide targeted support to segments affected by tariff policies, while preserving room for fiscal and monetary policy intervention, if needed.
"At this point, there is no need to implement such policies, but we have the space to do so if necessary," he added.
He also highlighted the government's structural reform efforts, such as reducing the fiscal deficit and promoting high-quality investments into the country.
This means these investments will create high-value jobs and subsequently generate higher income.