The IMF projected Malaysia’s economy to expand by 3.8% next year.
KUALA LUMPUR: The International Monetary Fund (IMF) has downgraded Malaysia’s real gross domestic product (GDP) growth forecast for this year to 4.1%, from 4.7% previously, reflecting a broader downward revision across the region.
In its April 2025 World Economic Outlook report titled A Critical Juncture amid Policy Shifts, the fund also projected Malaysia’s economy to expand by 3.8% next year.
The IMF trimmed its global growth forecast for this year to 2.8%, down 0.5 percentage points from its January estimate.
Among Malaysia’s regional peers, the IMF cut Indonesia’s outlook for this year to 4.7% from 5.1%.
The Philippines is now expected to grow by 5.5%, down from 6.1%, while Thailand’s forecast was revised to 1.8% from 2.9%.
The fund said major policy shifts were reshaping the global trade landscape and reigniting uncertainty, once again testing the global economy’s resilience.
“Since February, the United States has announced multiple waves of tariffs against trading partners, some of which have resulted in countermeasures.
“Markets initially took the announcements mostly in stride, until the United States’ near-universal application of tariffs on April 2, which triggered historic drops in major equity indices and spikes in bond yields, followed by a partial recovery after the pause and additional carve-outs announced on and after April 9,” it said.
The IMF reiterated that the global economy is at a critical juncture, with signs of stabilisation emerging through much of last year, after a prolonged and challenging period of unprecedented shocks.
“Inflation, down from multi decade highs, followed a gradual though bumpy decline toward central bank targets. Labour markets normalised, with unemployment and vacancy rates returning to pre-pandemic levels,” it added.
On productivity, the IMF noted widening discrepancies, as manufacturing activity continues shifting from advanced economies to emerging markets.
Industrial production plunged in all countries at the onset of the pandemic.
The recovery paths, however, have been decisively different.
Production has soared in China and has also expanded in smaller European Union (EU) economies and the Asean-5 of Indonesia, Malaysia, the Philippines, Singapore, Thailand, whereas it has struggled to return to pre-pandemic levels in Japan and the largest EU countries, it added.
Meanwhile, the IMF said industrial production in the United States has rebounded more strongly than in other advanced economies. — Bernama
