KUALA LUMPUR: The Malaysian Rating Corporation Bhd (MARC Ratings) forecasts the Malaysian economy to grow by 4.4 per cent in 2025, down from 5.1 per cent in 2024, as external trade uncertainties dampen export momentum.
It said that domestic demand remains resilient, driven by labour market improvements, accommodative policy settings and tourism recovery.
"The wholesale and retail trade index grew 4.8 per cent year-to-date (YTD) through April, up from 3.6 per cent in the same period last year,” it said in a statement today.
MARC Ratings said construction rose 14.2 per cent in 1Q2025 (4Q2024: 20.7 per cent), while agriculture rebounded by 0.6 per cent (4Q2024: -0.7 per cent).
"However, lingering external uncertainties prompted Bank Negara Malaysia (BNM) to cut the Overnight Policy Rate to 2.75 per cent in July from 3.0 per cent previously, and the central bank is expected to retain policy flexibility and respond accordingly to incoming data,” it said.
On the global outlook, MARC Ratings said global economic growth is expected to moderate in the second half of this year (2H2025) as trade tensions and geopolitical risks weigh on sentiment.
The United States’ (US) sweeping tariffs have reignited protectionist concerns, contributing to slower global growth.
"The US imposed tariffs of 25 per cent, signalling the need for greater reciprocity in future negotiations.
"Over time, US tariffs are anticipated to settle significantly higher than the long-term global average rate of 2.7 per cent, potentially in the high teens,” it added.
As for the Malaysian Government Securities (MGS), MARC Ratings said MGS saw strong demand in 1H2025, supported by healthy fundamentals and dovish pivots by major central banks.
"Cumulative net foreign debt inflows reached RM26.9 billion between January and May, driving MGS
yields 15 to 42 basis points lower. These factors contributed to a 5.3 per cent YTD appreciation of the ringgit as of mid-June.
"We opine that these trends may moderate in 2H2025 amid ongoing external uncertainties. Nevertheless, structural reforms under the 13th Malaysia Plan, Sales and Service Tax (SST) adjustments, and anticipated US Federal Reserve’s (US Fed) easing could help mitigate downside risks,” it added.
The ratings agency also expects the 10-year MGS yield to anchor around 3.50 per cent and the ringgit to approach RM4.25/US dollar by year-end.
The ringgit opened slightly lower against the US dollar on Friday, easing to 4.2440/2640 against the greenback from Thursday’s close of 4.2410/2505, supported by a slightly firmer US Dollar Index (DXY) and mixed signals from the US Fed. - Bernama
