PETALING JAYA: CIMB Securities Research has maintained its gross domestic product (GDP) growth forecast of 4% despite the positive impact on Malaysia following the United States’ temporary pause on tariffs on imports from all countries except China.
“The US President Donald Trump administration’s trade policy remains volatile, and there is considerable uncertainty surrounding the outcome of the planned US-Malaysia negotiations.
“A breakdown in talks could re-escalate trade tensions, dampen investor sentiment, and reduce trade flows globally.
“Consequently, we adopt a cautious approach and await greater clarity before incorporating these tariff scenarios into our baseline projections,” it said.
The research house believes that Trump’s tariff pause signalled a partial de-escalation of global trade tensions.
“While China remains subject to elevated duties, the exemption granted to other trading partners offers some relief to trade-dependent economies like Malaysia.
“The initial imposition of a 24% tariff on Malaysia had prompted us to revise down our 2025 GDP growth forecast for the country by one percentage point (pp) to 4%, mainly reflecting the anticipated drag on exports and investment,” it explained.
The research house reckoned that the potential impact on GDP growth varied depending on the duration and structure of the US tariff pause.
It said if the United States imposed a 10% tariff for a 90-day period before reverting to the original 24% rate, Malaysia could experience a modest growth uplift of about 0.2pp.
Meanwhile, If the 10% tariff is extended through the remainder of 2025, the upside could increase to 0.6pp, it added.
“In a more optimistic case where tariffs are fully removed after July, the growth boost could reach 0.8pp, potentially lifting full-year GDP growth to 4.8%.
“However, this remains below our initial 2025 forecast of 5%, reflecting the drag from heightened trade uncertainty amid renewed global trade tensions,” CIMB Securities Research said.
It added that bilateral US-Malaysia trade talks slated for end-April could further shape the economic outlook and may cover the dispute regarding Malaysia’s existing tariffs on selected US imports (including agriculture products, alcohol and motor vehicles) and other trade barriers such as the approved permit system, halal food import requirements, and foreign ownership limitations.
“In addition, discussions may also explore increasing imports of US goods (ie, defense, aircraft and capital equipment) to narrow the trade balance between the two countries.
“Should these agreements materialise, they could reinforce strategic economic ties and support trade growth in the second-half of 2025,” the research house said.
It added that while the tariff pause offers some reprieve, there remains room for Bank Negara to ease monetary policy if needed.
“We maintain our 2025 headline inflation forecast at 2.6%, which is within the central bank’s 1.5% to 2.5% projection range, aided by soft global commodity prices and potential disinflationary pressures arising from increased product dumping by China as it redirects exports away from the United States amid the escalating US-China trade war.
“These conditions afford Bank Negara adequate policy flexibility to respond pre-emptively should external risks materialise or weigh more heavily on growth in the months ahead,” said the research house.
