Malaysia Central Bank Cuts 2025 Growth, Inflation Forecasts

Bank Negara Malaysia has lowered its economic growth forecast for 2025 to a range of 4.0% to 4.8%, down from the previous 4.5% to 5.5%, citing global trade tensions, tariff uncertainties, and geopolitical risks as key factors impacting the outlook. The central bank's revised projections consider various tariff scenarios, including prolonged elevated tariffs and more favorable trade negotiations, with ongoing talks with the U.S. regarding potential tariffs on Malaysian exports progressing but still facing some challenges. Despite these external risks, Malaysia's economy remains resilient due to strong domestic demand, a favorable labor market, and continued investment activity supported by multi-year infrastructure projects and approved investments aligned with national development plans. The central bank also lowered its inflation forecast to between 1.5% and 2.3% for 2025, reflecting a more moderate outlook on costs and demand, with limited inflationary pressure expected from global commodity prices. Governor Abdul Rasheed Ghaffour emphasized that structural reforms undertaken over the years have strengthened Malaysia's economic position, providing a supportive environment for further reforms aimed at enhancing competitiveness and resilience. Additionally, sustained demand for electrical and electronic products and a robust rebound in tourism are seen as potential upside factors for growth.