Latest news with #StatisticsDepartment
The Sun
2 days ago
- Business
- The Sun
‘Economic growth hits 4.5% due to reforms'
PUTRAJAYA: Malaysia's economy is projected to expand by 4.5% in the second quarter of 2025, slightly up from 4.4% in the previous quarter, surpassing market forecasts and reinforcing its status as one of the region's fastest-growing economies. According to the Statistics Department, the better-than-expected performance is driven by resilient domestic demand and rising investor confidence. Housing and Local Government Minister Nga Kor Ming said the robust growth is a clear reflection of the Madani government's reform agenda in revitalising the economy and uplifting the people's well-being. 'The growth is a clear sign that our economic policies and people-first programmes are starting to show meaningful results. 'Even in the face of global challenges, our domestic economy remains strong, with consumer and investor confidence holding steady.' Nga highlighted the construction sector as a standout performer, projected to expand by 11%, fuelled by ongoing housing and commercial development. The services sector is expected to grow 5.3%, up from 5%, while the manufacturing sector is forecast to rise by 3.8%. Nga said the sustained economic momentum is being supported by key government initiatives such as the basic Rahmah contribution, Rahmah cash contribution, Rahmah aid and the increase in national minimum wage – all of which have boosted household incomes and strengthened domestic spending power. However, he cautioned that Malaysia must remain vigilant amid external uncertainties such as global trade tensions and tariff wars, adding that the government will continue to prioritise inclusive, broad-based growth. He also welcomed Bank Negara Malaysia's move to lower the Overnight Policy Rate (OPR) to 2.75%, describing it as a timely step to bolster economic activity, particularly in the property sector.
The Star
2 days ago
- Business
- The Star
Malaysia's low inflation expected to persist
PETALING JAYA: Malaysia's inflation rate is expected to remain low, with economists projecting the headline rate to hold at just 1.2% in June 2025. This expectation comes ahead of the Statistics Department's release of the consumer price index (CPI) data for June, due later today. Recall that Malaysia recorded an inflation rate of 1.2% in May 2025, marking the lowest level in 51 months, with the CPI rising to 134.4 from 132.8 a year earlier. As for June, seven of the 16 economists polled by Bloomberg are expecting CPI to grow by 1.2% year-on-year, suggesting continued softness in price pressures amid a relatively stable cost environment. Speaking to StarBiz, Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid expects the headline inflation rate to remain unchanged from May, supported by minimal policy-driven price pressure and a stronger ringgit. 'Policy changes in respect to tax and subsidies have been quite measured. 'The appreciation of the ringgit also helped to contain the imported price appreciation,' he explained. On the anticipated RON95 fuel subsidy rationalisation, Mohd Afzanizam believes the impact will be manageable if implemented through a targeted approach. 'It really depends on the mechanism. 'I suppose targeted subsidies would limit the impact, and we have seen how cash assistance such as the Sumbangan Asas Rahmah initiative has been disbursed via MyKad successfully,' he said. 'As such, the impact from the RON95 subsidy rationalisation is expected to be manageable,' he added. The RON95 targeted subsidy was supposed to be implemented in the second half of this year. However, Communications Minister Datuk Fahmi Fadzil announced yesterday that the implementation has been slightly delayed due to the need for a more detailed review of the mechanism. This delay provides a short reprieve from price pressures, as it was previously expected that a targeted fuel subsidy would raise the country's inflation. Mohd Afzanizam also said the recent 25-basis-point cut in the overnight policy rate (OPR) to 2.75% is unlikely to trigger inflationary pressure. 'The context for the OPR adjustment was to stimulate the economy preemptively in light of possible shocks from the US tariffs from Aug 1. 'On that note, we do not think the OPR decision can be inflationary,' he said, adding that the current low inflation rate provides Bank Negara room to ease policy. In a monetary policy statement, Bank Negara projected average inflation of between 2% and 3.5% in 2025. Additionally, the inflation outlook remains subject to global commodity prices, domestic policy changes and exchange rate developments. Sharing a similar view on price stability, Socio-Economic Research Centre executive director Lee Heng Guie also expects inflation to hold steady at 1.2% in June. However, he said recent tax reforms may gradually raise price levels in the coming months. 'The expanded sales and service tax (SST) will have a small direct impact on the CPI in July as essential items remain SST-exempt,' he said. Lee added that while the direct price effect will be limited, the tax expansion may have indirect consequences on costs. 'There will be an indirect impact by increasing the cost of production and ultimately affecting the prices of goods and services,' he said. He estimated that the SST expansion will likely add around 0.25 percentage points to the overall inflation rate in 2025. On the subsidy front, Lee views the upcoming RON95 fuel subsidy reform as a potential inflation variable, though he expects the impact to be contained. 'The impending implementation of RON95 fuel subsidy rationalisation remains a wild card, though 85% of total households will not be impacted,' he said. Regarding monetary policy, Lee believes the recent OPR cut is unlikely to change short-term inflation dynamics. 'The rate adjustment is more about supporting growth than containing inflation,' he said. Meanwhile, economist Geoffrey Williams expects inflation to remain low for the rest of the year, backed by modest domestic demand and the absence of major cost shocks. 'Headline inflation has been below 2% since July 2023 and fell to 1.2% in May. 'There have been no particularly inflationary issues during the year. 'So, we expect inflation to remain low, around 1.2% to 1.4%, in June,' he said. Looking ahead, he anticipates only a modest uptick in price levels in the second half of the year (2H25). 'For 2H25, there may be some uptick in inflation, but overall it will remain low, between 1.5% and 2%,' he said. Williams said the central bank's decision to lower interest rates will not have a major inflationary effect. 'The cut in OPR is accommodating growth risks but should not add to inflation,' he said. He also noted that the inflationary impact of subsidy reform may be deferred. 'The RON95 subsidy rationalisation has now been delayed, so this effect will be pushed forward,' he stated. On the SST, Williams believes the impact on prices will depend on how businesses respond. 'The SST changes should not add too much to inflation unless businesses pass on costs to consumers. 'So people should be vigilant and avoid products from companies passing on costs unnecessarily,' he said. Williams also offered a more optimistic outlook on the full-year inflation trajectory compared to the central bank's projection. 'The official forecast of 2% to 3.5% for the full year is pessimistic, and it is likely that the full-year outcome will be closer to 2% or below,' he added.
The Star
2 days ago
- Business
- The Star
Moderate growth path
PETALING JAYA: Malaysia's economy is expected to remain on a moderate growth path through 2025, supported by resilient domestic demand but challenged by mounting global trade tensions, according to research houses. Despite the encouraging 4.5% year-on-year expansion in the second quarter of 2025 (2Q25) advance estimates, released by the Statistics Department on July 18, analysts cautioned that external uncertainties – especially ongoing tariff negotiations with the United States – could cap the upside for full-year growth. Hong Leong Investment Bank (HLIB) Research said that domestic demand would 'remain the key growth driver, underpinned by a healthy labour market and supportive government policy measures.' It also noted the role of rising tourism activity – evident in a 10.5 million tourist arrival count from January to May – and improving investment trends as key pillars of growth. 'The continuous improvement in tourism activity and healthy investment pipelines will provide further support to overall momentum,' it said. However, the research house warned that the country's growth prospect faces mounting pressures from an uncertain global environment, particularly due to the ongoing US-Malaysia trade negotiations. It maintained its 2025 gross domestic product (GDP) forecast at 4% and projecting no change to the overnight policy rate (OPR) for the rest of the year. Similarly, CIMB Research highlighted domestic demand's resilience but flagged a more cautious trajectory for the rest of the year. 'Overall, the 2Q25 advance GDP figures reaffirmed domestic demand as the key growth anchor, offsetting persistent external sector headwinds,' it said. The economy expanded by 4.4% in the first half of 2025 (1H25), a moderation from 5% in 1H24. CIMB Research kept its GDP forecast unchanged at 4.3%, but warned: 'Should existing US tariffs of 25% remain in place beyond the Aug 1 deadline, we estimate that the GDP growth could ease further to around 4%, mainly due to a potential drag on external demand.' CGS International (CGSI) Research took a more cautionary tone regarding the external environment. 'We suspect that the softening growth in 2Q25 marks the start of a slowdown in external demand,' it said, citing the implementation of revised US tariffs. However, CGSI Research acknowledged potential reprieve, adding: 'We think that tariff execution date remains a moving goal post, based on US President Donald Trump's open stance on negotiations.' Domestically, it pointed to labour reforms, stable inflation, and tourism as buffers and maintained a 2025 GDP growth projection of 4.2%, down from 5.1% in 2024. TA Research also maintained a steady outlook, holding its GDP forecast at 4.4%. While it recognised headwinds from trade frictions, it highlighted supportive domestic conditions. 'The recent cut in the OPR is expected to provide a boost to economic activity, particularly through improved consumer and business sentiment in 2H25,' the research house said. BIMB Research provided a range-bound estimate, placing maximum potential GDP growth at 4.5% for 2025, though citing 4% as a more likely baseline given downside risks. 'Slowdown of exports of goods and coupled with slight moderation on investment activities are the dragging factors for this revision,' it said. It added that despite tariff exclusions and pauses, growth is subjected to direct and indirect effects of the heightening global trade war. The finalised 2Q25 GDP figures are scheduled for release on Aug 15, and will be closely watched for further insights into the country's economic trajectory amid global volatility.
The Sun
3 days ago
- Business
- The Sun
Fomca warns M40 squeezed and excluded from current aid framework
PETALING JAYA: Malaysia's middle class is being squeezed out of national policymaking, despite bearing the brunt of rising costs and shrinking financial buffers, says the Federation of Malaysian Consumers Associations (Fomca). Fomca chief operating officer Nur Asyikin Aminuddin said while public aid and subsidies are typically directed at the B40 group, the M40 – those earning between RM5,000 and RM10,000 monthly – are increasingly caught in a financial bind. The middle class is battling inflation, rising living costs and fading financial safety nets. 'They're too 'rich' for aid but not rich enough to withstand economic shocks. Their commitments – housing loans, education, insurance and care for ageing parents aren't factored into current income-based assessments. They're trapped in survival mode.' Nur Asyikin said Fomca has received more complaints from M40 households, especially since the Sales and Service Tax (SST) was raised to 8%. She said it has driven up service costs in logistics, repairs and professional fees – putting further pressure on household budgets. 'M40 families are facing higher prices on essentials like food, transport and utilities. Maintaining a decent standard of living in urban areas is increasingly difficult.' One alarming trend, she noted, is the rising number of families surrendering or letting health insurance policies lapse. 'Premiums have become unaffordable as basic needs take precedence. Any emergency – illness, retrenchment – leads to cost-cutting and insurance is often the first to go. With private healthcare costs rising, insurance is no longer a luxury but a necessity. Yet, many are underinsured or uninsured, forced to rely entirely on the overstretched public system.' Childcare and housing, she added, are critical pressure points. 'In urban areas, early education and daycare can consume 30% to 40% of household income. Some parents cut working hours or rely on unregulated caregivers, affecting both income and child development.' As for housing, many so-called 'affordable' homes fall short, said Nur Asyikin. 'People think they're buying stability, but end up in buildings with broken lifts or overcrowding. Home ownership should come with dignity and safety, not just a roof.' Fomca is calling for a major policy shift – away from rigid income categories like B40, M40 and T20 – to a more nuanced, needs-based framework. Specifically, it urges the adoption of the Reasonable Basic Living Expenses (Perbelanjaan Asas Kehidupan Wajar or PAKW) tool, developed by the Statistics Department. 'PAKW calculates household well-being based on actual spending needed for a dignified life, including food, housing, healthcare, transport and childcare, not just income. 'It adjusts for location, family size and life stage, offering a clearer picture of who truly needs support.' Nur Asyikin said wider PAKW adoption across ministries could make social programmes more effective, especially for urban, middle-income households. Fomca also recommends breaking down the M40 into lower and upper tiers and publishing regional PAKW data for more localised policymaking. 'There is a growing class of 'invisible poor' within the M40 who don't show up in statistics simply because their income sits just above the cut-off. 'The government must realise that well-being isn't just about surviving, it's about helping families live with dignity.'
The Sun
3 days ago
- Business
- The Sun
Fomca calls for major policy shift
PETALING JAYA: Malaysia's middle class is being squeezed out of national policymaking, despite bearing the brunt of rising costs and shrinking financial buffers, says the Federation of Malaysian Consumers Associations (Fomca). Fomca chief operating officer Nur Asyikin Aminuddin said while public aid and subsidies are typically directed at the B40 group, the M40 – those earning between RM5,000 and RM10,000 monthly – are increasingly caught in a financial bind. The middle class is battling inflation, rising living costs and fading financial safety nets. 'They're too 'rich' for aid but not rich enough to withstand economic shocks. Their commitments – housing loans, education, insurance and care for ageing parents aren't factored into current income-based assessments. They're trapped in survival mode.' Nur Asyikin said Fomca has received more complaints from M40 households, especially since the Sales and Service Tax (SST) was raised to 8%. She said it has driven up service costs in logistics, repairs and professional fees – putting further pressure on household budgets. 'M40 families are facing higher prices on essentials like food, transport and utilities. Maintaining a decent standard of living in urban areas is increasingly difficult.' One alarming trend, she noted, is the rising number of families surrendering or letting health insurance policies lapse. 'Premiums have become unaffordable as basic needs take precedence. Any emergency – illness, retrenchment – leads to cost-cutting and insurance is often the first to go. With private healthcare costs rising, insurance is no longer a luxury but a necessity. Yet, many are underinsured or uninsured, forced to rely entirely on the overstretched public system.' Childcare and housing, she added, are critical pressure points. 'In urban areas, early education and daycare can consume 30% to 40% of household income. Some parents cut working hours or rely on unregulated caregivers, affecting both income and child development.' As for housing, many so-called 'affordable' homes fall short, said Nur Asyikin. 'People think they're buying stability, but end up in buildings with broken lifts or overcrowding. Home ownership should come with dignity and safety, not just a roof.' Fomca is calling for a major policy shift – away from rigid income categories like B40, M40 and T20 – to a more nuanced, needs-based framework. Specifically, it urges the adoption of the Reasonable Basic Living Expenses (Perbelanjaan Asas Kehidupan Wajar or PAKW) tool, developed by the Statistics Department. 'PAKW calculates household well-being based on actual spending needed for a dignified life, including food, housing, healthcare, transport and childcare, not just income. 'It adjusts for location, family size and life stage, offering a clearer picture of who truly needs support.' Nur Asyikin said wider PAKW adoption across ministries could make social programmes more effective, especially for urban, middle-income households. Fomca also recommends breaking down the M40 into lower and upper tiers and publishing regional PAKW data for more localised policymaking. 'There is a growing class of 'invisible poor' within the M40 who don't show up in statistics simply because their income sits just above the cut-off. 'The government must realise that well-being isn't just about surviving, it's about helping families live with dignity.'
