KUALA LUMPUR: BMI, a Fitch Solutions company, projected Malaysia’s economy to be resilient in 2024, with a real gross domestic product (GDP) growth forecast of 5.0 per cent, supported by robust investment and resilient consumption.
Although the GDP growth is forecasted to slow down to about 4.7 per cent in 2025, this will still be in line with its pre-pandemic times, said country risk analyst Caroline Wong.
"Key drivers to the outlook include robust investment and resilient consumption, despite potential inflationary pressures stemming from the upcoming withdrawal of subsidies,” she said.
Wong said this during BMI’s webinar on ‘Asia Macroeconomic Update: Elevated Uncertainty for 2025 Economic Outlook Amid Political and Fiscal Challenges’.
While uncertainties surround the impact of new tariffs under the United States (US) President-elect Donald Trump’s administration, she sees a potential double-edged effect on Malaysia.
"We think that while the nature of the protectionist shift is not yet clear, we assume that any new tariffs will focus on manufactured and industrial goods.
"Malaysia will not be spared from this, given that its exports to the US are about 11.4 per cent of its own GDP,” she said.
Wong added that Trump's potential tariffs on China might bode well for Malaysia as Chinese companies might actively try to move their investments upwards, and Malaysia could benefit from it.
On semiconductors, she said BMI remains optimistic about the momentum of Malaysia’s semiconductor industry, given that each semiconductor upcycle lasts for about 15-18 months.
However, potential slowdowns in economic activity across major markets, such as the US and mainland China, could exert some pressure on global demand.
"But as we highlighted that the potential imposition of the Trump tariffs on China could see Chinese companies moving their operations to Malaysia, and that could see Malaysia benefiting from being involved in a more value-added part of the manufacturing process, which we think will be a good tailwind for Malaysia,” she concluded.
On the regional outlook, head of Asia country risk, Darren Tay said Asia is expected to maintain steady growth and remain the fastest-growing region in terms of economic growth, at around 4.0 per cent in 2025.
He added if Trump’s policies raise inflation in the US and restrict the Federal Reserve’s ability to ease monetary policy, this would limit the broad monetary easing anticipated in Asia.
"Benign inflation and a robust growth outlook provide Bank Negara Malaysia with ample policy space to leave the overnight policy rate at its current level through 2025,” he said. - Bernama
