Latest news with #OECDEconomicOutlook
The Sun
a day ago
- Business
- The Sun
OECD urges Malaysia to enhance competitiveness, resilience
KUALA LUMPUR: The Organisation for Economic Cooperation and Development (OECD) has urged Malaysia to implement further measures to enhance its economic competitiveness and strengthen its resilience. Speaking during a virtual conference on the OECD Economic Outlook today, the organisation's head of division for Southeast Asia, Jens Arnold, said Malaysia should consider additional reforms to bolster its resilience amid ongoing global uncertainties. Recent media reports indicate that the United States has proposed a so-called 'revenge tax' – a retaliatory initiative aimed at countering what it views as unfair tax practices by other nations. The proposed measure would apply to passive income earned from US investments and profits generated by companies operating within the country. It specifically targets foreign-owned entities, including governments, corporations and private foundations, potentially affecting a broad spectrum of international stakeholders. Arnold said improvements in Malaysia could include reducing the remaining restrictions on foreign direct investment (FDI) and ensuring a more level playing field between state-owned enterprises, government-linked companies, and the private sector. 'Malaysia has some scope for support on the monetary side. Inflation is low and has been very well contained, but beyond that, it is even more important to consider structural policies that can enhance the economy's competitiveness going forward,' he said. He also emphasised the importance of addressing labour market challenges, particularly skills mismatches, through increased investment in education to better equip the workforce for future disruptions. 'These are critical steps to make the economy more resilient and capable of withstanding shocks on the horizon,' he added. Meanwhile, OECD chief economist Alvaro Pereira said Malaysia's economy is projected to grow by 3.8% in 2025, due to expectations of softer export performance. He noted that although Malaysia recorded a stronger export performance in 2024, continuing global uncertainties may weigh on trade this year. Pereira also said Malaysia's inflation was 1.8% in 2024, and is expected to rise modestly to 2.2% in 2025, before climbing to 2.7% in 2026. 'Currently, Malaysia's labour market is remarkably strong and is expected to support private consumption going forward. Unemployment is at a 10-year low, while labour force participation continues to rise steadily,' he said. He added that the current monetary policy stance is broadly neutral and is rightly expected to remain so, though there is some room for easing should growth weaken. However, he cautioned that monetary authorities should remain vigilant to potential price pressures, especially from a tight labour market, as well as increases in the minimum wage and civil servants' salaries. Arnold said that in 2024, the five key Southeast Asian countries – Indonesia, Malaysia, the Philippines, Thailand and Vietnam – grew at a weighted average of 5%, a pace that was considerably stronger than, or on par with, growth in the OECD area (Europe, the Americas and Asia-Pacific), as well as in China. However, he said the OECD projects a more challenging growth environment for the region this year. 'What is clear is that tariffs and the policy uncertainty we are seeing now are likely to dent trade and investment, which will take a toll on overall growth. Some of the most recent purchasing manager indices already show early signs of slowing activity,' he said. He also highlighted that opening up markets to greater competition could significantly boost productivity. 'For instance, regulatory policies – particularly those related to licensing and administrative burdens for new entrants, including foreign players – often play a crucial role in this regard. 'The five Southeast Asian countries remain more restrictive than many other economies, so reducing barriers to FDI and services would be an effective way to improve the competitiveness of domestic producers,' he added. – Bernama
New Straits Times
2 days ago
- Business
- New Straits Times
OECD urges Malaysia to boost competitiveness amid global uncertainty
KUALA LUMPUR: The Organisation for Economic Co-operation and Development (OECD) has urged Malaysia to implement further measures to enhance its economic competitiveness and strengthen its resilience. Speaking during a virtual conference on the OECD Economic Outlook today, the organisation's head of division for Southeast Asia, Jens Arnold, said Malaysia should consider additional reforms to bolster its resilience amid ongoing global uncertainties. Recent media reports indicate that the United States (US) has proposed a so-called "revenge tax" — a retaliatory initiative aimed at countering what it views as unfair tax practices by other nations. The proposed measure would apply to passive income earned from US investments and profits generated by companies operating within the country. It specifically targets foreign-owned entities, including governments, corporations, and private foundations, potentially affecting a broad spectrum of international stakeholders. Arnold said improvements in Malaysia could include reducing the remaining restrictions on foreign direct investment (FDI) and ensuring a more level playing field between state-owned enterprises, government-linked companies, and the private sector. "Malaysia has some scope for support on the monetary side. Inflation is low and has been very well contained, but beyond that, it is even more important to consider structural policies that can enhance the economy's competitiveness going forward," he said. He also emphasised the importance of addressing labour market challenges, particularly skills mismatches, through increased investment in education to better equip the workforce for future disruptions. "These are critical steps to make the economy more resilient and capable of withstanding shocks on the horizon," he added. Meanwhile, OECD chief economist Alvaro Pereira said Malaysia's economy is projected to grow by 3.8 per cent in 2025, due to expectations of softer export performance. He noted that although Malaysia recorded a stronger export performance in 2024, continuing global uncertainties may weigh on trade this year. Pereira also said Malaysia's inflation was 1.8 per cent in 2024, and is expected to rise modestly to 2.2 per cent in 2025, before climbing to 2.7 per cent in 2026. "Currently, Malaysia's labour market is remarkably strong and is expected to support private consumption going forward. Unemployment is at a 10-year low, while labour force participation continues to rise steadily," he said. He added that the current monetary policy stance is broadly neutral and is rightly expected to remain so, though there is some room for easing should growth weaken. However, he cautioned that monetary authorities should remain vigilant to potential price pressures, especially from a tight labour market, as well as increases in the minimum wage and civil servants' salaries. Southeast Asia Outlook Arnold said that in 2024, the five key Southeast Asian countries — Indonesia, Malaysia, the Philippines, Thailand, and Vietnam — grew at a weighted average of five per cent, a pace that was considerably stronger than, or on par with, growth in the OECD area (Europe, the Americas, and Asia-Pacific), as well as in China. However, he said the OECD projects a more challenging growth environment for the region this year. "What is clear is that tariffs and the policy uncertainty we are seeing now are likely to dent trade and investment, which will take a toll on overall growth. Some of the most recent purchasing manager indices already show early signs of slowing activity," he said. He also highlighted that opening up markets to greater competition could significantly boost productivity. "For instance, regulatory policies — particularly those related to licensing and administrative burdens for new entrants, including foreign players — often play a crucial role in this regard. "The five Southeast Asian countries remain more restrictive than many other economies, so reducing barriers to FDI and services would be an effective way to improve the competitiveness of domestic producers," he added.
The Star
2 days ago
- Business
- The Star
OECD urges Malaysia to boost competitiveness amid global uncertainty
KUALA LUMPUR: The Organisation for Economic Co-operation and Development (OECD) has urged Malaysia to implement further measures to enhance its economic competitiveness and strengthen its resilience. Speaking during a virtual conference on the OECD Economic Outlook today, the organisation's head of division for Southeast Asia, Jens Arnold, said Malaysia should consider additional reforms to bolster its resilience amid ongoing global uncertainties. Recent media reports indicate that the United States (US) has proposed a so-called "revenge tax' - a retaliatory initiative aimed at countering what it views as unfair tax practices by other nations. The proposed measure would apply to passive income earned from US investments and profits generated by companies operating within the country. It specifically targets foreign-owned entities, including governments, corporations, and private foundations, potentially affecting a broad spectrum of international stakeholders. Arnold said improvements in Malaysia could include reducing the remaining restrictions on foreign direct investment (FDI) and ensuring a more level playing field between state-owned enterprises, government-linked companies, and the private sector. "Malaysia has some scope for support on the monetary side. Inflation is low and has been very well contained, but beyond that, it is even more important to consider structural policies that can enhance the economy's competitiveness going forward,' he said. He also emphasised the importance of addressing labour market challenges, particularly skills mismatches, through increased investment in education to better equip the workforce for future disruptions. "These are critical steps to make the economy more resilient and capable of withstanding shocks on the horizon,' he added. Meanwhile, OECD chief economist Alvaro Pereira said Malaysia's economy is projected to grow by 3.8 per cent in 2025, due to expectations of softer export performance. He noted that although Malaysia recorded a stronger export performance in 2024, continuing global uncertainties may weigh on trade this year. Pereira also said Malaysia's inflation was 1.8 per cent in 2024, and is expected to rise modestly to 2.2 per cent in 2025, before climbing to 2.7 per cent in 2026. "Currently, Malaysia's labour market is remarkably strong and is expected to support private consumption going forward. Unemployment is at a 10-year low, while labour force participation continues to rise steadily,' he said. He added that the current monetary policy stance is broadly neutral and is rightly expected to remain so, though there is some room for easing should growth weaken. However, he cautioned that monetary authorities should remain vigilant to potential price pressures, especially from a tight labour market, as well as increases in the minimum wage and civil servants' salaries. Southeast Asia Outlook Arnold said that in 2024, the five key Southeast Asian countries - Indonesia, Malaysia, the Philippines, Thailand, and Vietnam - grew at a weighted average of five per cent, a pace that was considerably stronger than, or on par with, growth in the OECD area (Europe, the Americas, and Asia-Pacific), as well as in China. However, he said the OECD projects a more challenging growth environment for the region this year. "What is clear is that tariffs and the policy uncertainty we are seeing now are likely to dent trade and investment, which will take a toll on overall growth. Some of the most recent purchasing manager indices already show early signs of slowing activity,' he said. He also highlighted that opening up markets to greater competition could significantly boost productivity. "For instance, regulatory policies - particularly those related to licensing and administrative burdens for new entrants, including foreign players - often play a crucial role in this regard. "The five Southeast Asian countries remain more restrictive than many other economies, so reducing barriers to FDI and services would be an effective way to improve the competitiveness of domestic producers,' he added. - Bernama
Int'l Business Times
2 days ago
- Business
- Int'l Business Times
US Economy Faces Tariff Turmoil: Growth Slows, Prices Soar!
The global economy is teetering on the edge, and the US is at the heart of the storm. According to a recent OECD Economic Outlook , President Donald Trump's aggressive tariff policies are set to choke US economic growth to a mere 1.6% in 2025, down from 2.8% last year, while pushing inflation towards 3.9% by year-end. These sweeping import duties, now at a staggering 15.4%, the highest since 1938, are rippling across global markets, hitting consumers and businesses hard. From retail giants to small manufacturers, the fallout is reshaping strategies and squeezing wallets. But what does this mean for the average shopper, and how can businesses navigate this turbulent landscape? Brace for Higher Prices Now The OECD report paints a grim picture: tariffs are driving up costs for US importers, who pass these onto consumers. Retailers like Walmart face a tough choice, absorb the hit or raise prices. A Reuters analysis notes that US households will bear the brunt, with inflation projected to climb from 2.5% in 2024 to 2.8% in 2025, potentially nearing 4% by December. Small retailers, unable to shoulder the costs, are already warning of price hikes between 14% and 35%. On X posts, sentiment echoes this concern, with users lamenting rising costs for everyday goods like clothing and electronics. For consumers, this means tighter budgets and fewer choices, unless businesses get creative. Adapt Supply Chains Fast The tariff squeeze is forcing companies to rethink their supply chains. The OECD highlights how higher import costs and policy uncertainty are dampening corporate investment and consumer confidence. Some firms are exploring domestic manufacturing to bypass tariffs, but this shift isn't cheap, retooling factories could cost billions. Others are diversifying suppliers, looking to countries like Vietnam or India to sidestep the worst of the levies. However, the same Reuters report warns that prolonged trade barriers could disrupt global supply chains further, potentially costing the US economy more than the tariff revenue gained. Businesses that act swiftly to localise or diversify stand a better chance of keeping costs down and staying competitive. Seize Opportunities Amid Chaos While tariffs spell trouble, they also open doors for savvy players. The OECD suggests that technology, particularly AI, could boost US productivity, offering a silver lining. Companies investing in automation or robotics might offset tariff-driven costs and gain a market share edge. For instance, firms that streamline operations or negotiate better supplier terms could keep prices stable, winning over cost-conscious shoppers. The challenge is balancing short-term pain with long-term gains, something not all businesses can afford. As X posts reflect, some consumers are already praising brands that hold prices steady, hinting at loyalty rewards for those who adapt effectively. Navigate Tariffs or Sink Trying The OECD's warning is clear: US tariffs are a double-edged sword, slashing growth while fuelling inflation. With global GDP growth trimmed to 2.9% for 2025, the stakes are high for businesses and consumers alike. The path forward demands ingenuity, whether through smarter supply chains, tech investments, or price-stabilising strategies. As the US navigates this economic minefield on 04 June 2025, one thing is certain: those who adapt will thrive, while those who don't risk being left behind. The global economy is watching, and the US must choose its next steps wisely, or pay a steeper price than any tariff could impose. Originally published on IBTimes UK
Straits Times
3 days ago
- Business
- Straits Times
Trump's tariffs are hurting US and global economy, OECD warns
OECD secretary-general Mathias Cormann at the presentation of the OECD Economic Outlook in Paris on June 3. The OECD has slashed its global forecasts for the second time in 2025. PHOTO: REUTERS PARIS – US President Donald Trump's combative trade policies have tipped the world economy into a downturn clouded in heightened uncertainty, with the United States among the hardest hit, the OECD has warned. The Organisation for Economic Cooperation and Development (OECD) slashed its global forecasts for the second time in 2025, citing the impact of Mr Trump's tariff onslaught. The combination of trade barriers and uncertainty are hitting confidence and holding back investment, the Paris-based organisation said, while also warning that protectionism is adding to inflationary pressures. The OECD now forecasts global economic growth to slow to 2.9 per cent in 2025 from 3.3 per cent in 2024. It expects the rate of expansion in the US will tumble further, to 1.6 per cent from 2.8 per cent – an outlook that is significantly lower than its projection in March. 'Weakened economic prospects will be felt around the world, with almost no exception,' the OECD's chief economist Alvaro Pereira said. 'Lower growth and less trade will hit incomes and slow job growth.' The assessment indicates how Mr Trump's policies have become the most pressing problem for the global economy, with no easy solution in sight. The situation could yet be exacerbated by retaliation from US trading partners, a further erosion of confidence or another bout of repricing on financial markets, the OECD said. The club of 38 rich countries published its forecasts just as its members' ministers convene in Paris for an annual meeting. Top commerce officials are expected there, including US Trade Representative Jamieson Greer and EU Trade Commissioner Maros Sefcovic. Mr Lin Feng, a representative from China's Ministry of Commerce, is also scheduled to attend. 'Agreements to ease trade tensions and lower tariffs and other trade barriers will be instrumental to revive growth and investment and avoid rising prices,' the OECD said. 'This is by far the most important policy priority.' Yet, the organisation also said even if Mr Trump reverses course on tariffs, the bonus in terms of growth and reduced inflation would not materialise immediately, due to a persistent drag from heightened uncertainty over policy. For the US, the OECD said curbs on immigration and a sizable reduction in the federal workforce add to the trade-related drag on the economy. It also cautioned that the US budget deficit will expand further as the effect of weaker economic activity will more than offset spending cuts and revenues from tariffs. Inflation in the US will also move higher in 2025, making it likely that the Federal Reserve will not resume easing policy until 2026, according to the OECD. That process may even be derailed if consumer-price expectations get de-anchored, it added. For other central banks, the OECD also urged continued vigilance. While it expects inflation to ease to their targets in 2026, that process will now take longer, and the pace of price increases may even increase before easing again, it said. Besides the fallout from global trade, the OECD also warned that fiscal risks are intensifying around the world, with 'tremendous' pressures for more spending on defence, climate and aging populations. It called for governments to reduce non-essential spending and raise revenues by broadening tax bases. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
