Malaysia Weighs Growth Forecast Cut as U.S. Tariff Deadline Looms

Malaysia is likely to lower its 2025 GDP growth forecast of 4.5% to 5.5% due to rising trade tensions and looming U.S. tariffs, according to Bank Negara Malaysia Governor Abdul Rasheed Ghaffour. Speaking at an IMF event in Washington, he emphasized that while a revision is not immediate, the government is closely monitoring global trade developments before making any adjustments.

The country is facing a potential 24% tariff on goods exported to the United States starting in July, unless a trade deal is reached. In response, Malaysia’s trade minister and second finance minister are currently in the U.S. for high-level discussions with the U.S. Trade Representative and other key officials.

Despite external uncertainties, Abdul Rasheed remains confident in Malaysia’s economic resilience, citing stronger-than-expected GDP growth of 5.1% in 2024, robust domestic demand, a rebound in exports, and an uptick in investment activities. These factors, he noted, give Malaysia a “position of strength” as it navigates global economic headwinds.

The central bank’s current interest rate of 3% remains supportive of growth, with inflation deemed manageable. Abdul Rasheed stressed that monetary policy must avoid amplifying economic volatility and instead focus on maintaining price stability to support long-term sustainable growth.

As global markets brace for shifts in U.S. trade policy, Malaysia’s cautious yet steady approach aims to safeguard economic momentum while remaining responsive to evolving geopolitical dynamics. The outcome of the ongoing trade negotiations in Washington will likely shape Malaysia’s economic trajectory for the rest of the year.