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BusinessToday
16-05-2025
- Business
- BusinessToday
OCBC Revises Malaysia's Monetary Policy Forecast
Malaysia's economy expanded by 4.4% year-on-year in the first quarter of 2025, matching advance estimates, but signs of a broader slowdown have prompted OCBC Bank to revise its monetary policy forecast, bringing forward expectations of Bank Negara Malaysia (BNM) rate cuts to the second half of this year. According to OCBC Malaysia's Senior ASEAN Economist Lavanya Venkateswaran, the unchanged GDP print—down from 4.9% in Q4 2024—masks underlying weakness in domestic demand and exports, both of which are expected to weigh on growth in the coming quarters. 'The final Q1 GDP figure reflects softening domestic consumption and investments, coupled with slower goods exports,' OCBC noted in its latest economic update. 'Given the rising external risks, particularly from US trade tariffs, we now expect BNM to cut its policy rate by a total of 50 basis points in 2H25, earlier than our previous forecast of 1H26″ she said. Domestic Demand and Exports Show Signs of Fatigue OCBC noted that the domestic final demand contributed 5.7 percentage points (pp) to GDP growth in Q1 2025, down from 6.0pp in Q4 2024. Household consumption growth moderated to 5.0%, while investment activity cooled to 9.7% from 11.8% in the previous quarter. Public sector spending remained stable, while government expenditure edged slightly higher to 4.3% from 4.0%. Net exports added just 0.8pp to GDP growth, a sharp drop from 2.0pp in Q4 2024. Goods exports grew by only 1.6% year-on-year, while services exports held up relatively well, rising 16.9% amid continued strength in tourism inflows. However, the Bank said inventory drawdowns continued to drag on growth, subtracting 2.2pp from headline GDP—a fifth consecutive quarter of negative contribution from inventories. Sectoral Trends and External Balances On the supply side, downward revisions were made to growth in the manufacturing, construction, and services sectors, although the construction and services sectors remained relatively resilient. The contraction in the mining and quarrying sector was revised to -2.7% from an earlier estimate of -4.9%. Malaysia's current account surplus widened to RM16.7 billion (3.4% of GDP) in Q1 2025, up from RM12.9 billion in Q4, supported by a stronger goods trade surplus and a smaller secondary income deficit. However, the capital and financial account posted a wider deficit of RM20.2 billion, led by increased portfolio outflows and a slight decline in FDI inflows. Growth Outlook Dampened by Global Uncertainty OCBC projects Malaysia's GDP growth to slow further to 4.3% in 2025, down from 5.1% in 2024. Key downside risks include the imposition of US tariffs on Malaysian exports—particularly in sectors like semiconductors and pharmaceuticals—as well as a broader cooling in household and corporate spending due to growing global uncertainty. The bank expects Malaysia's current account surplus to narrow slightly to 1.7% of GDP in 2025, from 1.4% last year. 'With businesses adopting a wait-and-see approach and households turning cautious, economic momentum could ease further,' OCBC said. 'This makes the case for a more accommodative monetary policy.' BNM Signals Readiness to Act At its latest meeting on 8 May, BNM adopted a more dovish tone, citing increased downside risks to the economy. The central bank also reduced the Statutory Reserve Requirement (SRR) from 2% to 1%, effective 16 May, injecting RM19 billion in liquidity into the system. BNM Governor Tan Sri Abdul Rasheed Ghaffour commented that the central bank 'has the policy space to act if needed,' signaling readiness to support the economy if conditions deteriorate. OCBC believes that the upcoming BNM meetings—scheduled for 9 July, 4 September, and 6 November—will be closely watched for signs of a rate cut, depending on incoming economic data and the outcome of US-Malaysia trade negotiations. Related
The Star
16-05-2025
- Business
- The Star
Malaysia posts RM16.7bil surplus in current account balance in 1Q 2025
KUALA LUMPUR: Malaysia's current account balance (CAB) recorded a RM16.7 billion surplus in the first quarter of 2025 (1Q 2025), equivalent to 3.4 per cent of the gross domestic product (GDP), supported by net exports of goods and a smaller deficit in the secondary income account, said Statistics Department Malaysia (DOSM). In a statement, chief statistician Datuk Seri Mohd Uzir Mahidin said the improvement was driven by net exports of goods, which amounted to RM38.5 billion. "Exports of goods reached RM283.2 billion, a 4.0 per cent decrease compared to the previous quarter. Malaysia's leading export items include electrical and electronics; petroleum products; and machinery, equipment and parts, with Singapore, the United States (US) and China being the top trading partners," he said. Mohd Uzir said imports of goods declined by 5.2 per cent quarter-on-quarter to RM244.7 billion, primarily reflecting lower imports of intermediate goods, capital goods and consumption goods, with key sources of imports being China, Singapore and Taiwan. DOSM said the higher CAB was due to a smaller deficit in the secondary income account of RM1.2 billion in 1Q 2025 against RM5.9 billion in the preceding quarter, driven by higher settlement receipts from abroad. DOSM said the financial account registered a RM20.3 billion net outflow versus RM9.3 billion in the last quarter, driven by a significant increase in portfolio investment. There was a RM48.3 billion net outflow compared with RM42.0 billion in the previous quarter, contributed by resident subscription of foreign equity securities. According to DOSM, foreign direct investment recorded a net inflow of RM15.6 billion in 1Q 2025 against RM18.7 billion in 4Q 2024 due to lower investment in debt instruments. It said FDI inflows were mostly channelled to the services sector, largely within financial activities and information and communication subsectors related to data centre activities; major FDI investors were from Singapore, Hong Kong and Germany. At the same time, direct investment abroad (DIA) registered a lower RM3.5 billion net outflow versus RM5.2 billion in 4Q 2024. "The outflows were principally in the form of equity and investment fund shares, mainly directed towards the services sector, with the majority concentrated in financial activities. Indonesia, Brunei and Thailand were DIA main destinations during the quarter,' DOSM said. At the end of 1Q 2025, its international investment position amounted to RM37.8 billion in net assets, and its international reserves at RM520.7 billion as at end-March 2025. - Bernama
The Sun
16-05-2025
- Business
- The Sun
Malaysia posts RM16.7b surplus in current account balance in 1Q 2025
KUALA LUMPUR: Malaysia's current account balance (CAB) recorded a RM16.7 billion surplus in the first quarter of 2025 (1Q 2025), equivalent to 3.4 per cent of the gross domestic product (GDP), supported by net exports of goods and a smaller deficit in the secondary income account, said Statistics Department Malaysia (DOSM). In a statement, chief statistician Datuk Seri Mohd Uzir Mahidin said the improvement was driven by net exports of goods, which amounted to RM38.5 billion. 'Exports of goods reached RM283.2 billion, a 4.0 per cent decrease compared to the previous quarter. Malaysia's leading export items include electrical and electronics; petroleum products; and machinery, equipment and parts, with Singapore, the United States (US) and China being the top trading partners,' he said. Mohd Uzir said imports of goods declined by 5.2 per cent quarter-on-quarter to RM244.7 billion, primarily reflecting lower imports of intermediate goods, capital goods and consumption goods, with key sources of imports being China, Singapore and Taiwan. DOSM said the higher CAB was due to a smaller deficit in the secondary income account of RM1.2 billion in 1Q 2025 against RM5.9 billion in the preceding quarter, driven by higher settlement receipts from abroad. DOSM said the financial account registered a RM20.3 billion net outflow versus RM9.3 billion in the last quarter, driven by a significant increase in portfolio investment. There was a RM48.3 billion net outflow compared with RM42.0 billion in the previous quarter, contributed by resident subscription of foreign equity securities. According to DOSM, foreign direct investment recorded a net inflow of RM15.6 billion in 1Q 2025 against RM18.7 billion in 4Q 2024 due to lower investment in debt instruments. It said FDI inflows were mostly channelled to the services sector, largely within financial activities and information and communication subsectors related to data centre activities; major FDI investors were from Singapore, Hong Kong and Germany. At the same time, direct investment abroad (DIA) registered a lower RM3.5 billion net outflow versus RM5.2 billion in 4Q 2024. 'The outflows were principally in the form of equity and investment fund shares, mainly directed towards the services sector, with the majority concentrated in financial activities. Indonesia, Brunei and Thailand were DIA main destinations during the quarter,' DOSM said. At the end of 1Q 2025, its international investment position amounted to RM37.8 billion in net assets, and its international reserves at RM520.7 billion as at end-March 2025.
The Sun
16-05-2025
- Business
- The Sun
Malaysia posts RM16.7b surplus in current account balance
KUALA LUMPUR: Malaysia's current account balance (CAB) recorded a RM16.7 billion surplus in the first quarter of 2025 (1Q 2025), equivalent to 3.4 per cent of the gross domestic product (GDP), supported by net exports of goods and a smaller deficit in the secondary income account, said Statistics Department Malaysia (DOSM). In a statement, chief statistician Datuk Seri Mohd Uzir Mahidin said the improvement was driven by net exports of goods, which amounted to RM38.5 billion. 'Exports of goods reached RM283.2 billion, a 4.0 per cent decrease compared to the previous quarter. Malaysia's leading export items include electrical and electronics; petroleum products; and machinery, equipment and parts, with Singapore, the United States (US) and China being the top trading partners,' he said. Mohd Uzir said imports of goods declined by 5.2 per cent quarter-on-quarter to RM244.7 billion, primarily reflecting lower imports of intermediate goods, capital goods and consumption goods, with key sources of imports being China, Singapore and Taiwan. DOSM said the higher CAB was due to a smaller deficit in the secondary income account of RM1.2 billion in 1Q 2025 against RM5.9 billion in the preceding quarter, driven by higher settlement receipts from abroad. DOSM said the financial account registered a RM20.3 billion net outflow versus RM9.3 billion in the last quarter, driven by a significant increase in portfolio investment. There was a RM48.3 billion net outflow compared with RM42.0 billion in the previous quarter, contributed by resident subscription of foreign equity securities. According to DOSM, foreign direct investment recorded a net inflow of RM15.6 billion in 1Q 2025 against RM18.7 billion in 4Q 2024 due to lower investment in debt instruments. It said FDI inflows were mostly channelled to the services sector, largely within financial activities and information and communication subsectors related to data centre activities; major FDI investors were from Singapore, Hong Kong and Germany. At the same time, direct investment abroad (DIA) registered a lower RM3.5 billion net outflow versus RM5.2 billion in 4Q 2024. 'The outflows were principally in the form of equity and investment fund shares, mainly directed towards the services sector, with the majority concentrated in financial activities. Indonesia, Brunei and Thailand were DIA main destinations during the quarter,' DOSM said. At the end of 1Q 2025, its international investment position amounted to RM37.8 billion in net assets, and its international reserves at RM520.7 billion as at end-March 2025.
New Straits Times
16-05-2025
- Business
- New Straits Times
Malaysia's current account surplus expands to US$3.92 billion in Q1
KUALA LUMPUR: Malaysia's current account surplus expanded to RM16.7 billion (US$3.92 billion) in the first quarter of 2025 from 12.9 billion ringgit in the final quarter of 2024, central bank and government data showed on Friday. Portfolio investment saw a net outflow of RM48.3 billion in the January-to-March period, compared to a net outflow of RM42 ringgit in the previous quarter.
