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SATURDAY | MAY 17, 2025

Revised GDP growth forecast out within two months: BNM

M’sian exporters see limited short-term impact from US tariffs KUALA LUMPUR: The negative impact of new US tariffs on Malaysian exporters and multinational corporations may be limited in the short term, according to Bank Negara Malaysia (BNM). Governor Datuk Shaik Abdul Rasheed Abdul Ghaffour said 69% of the 36 export oriented firms engaged by the central bank reported that they do not expect to be negatively affected over the next three months. “The tariffs will affect our exports directly through lower demand from the US and indirectly via lower global growth, especially from our major trading partners. We expect the impact will be contained and limited,“ he said at a press conference on Malaysia’s first-quarter 2025 gross domestic product growth yesterday. He noted that mitigating factors could help cushion the near-term impact, including the front-loading of exports by firms ahead of tariff enforcement. “We have observed some signs of front loading in E&E exports as firms try to soften the impact of tariffs. This can cause the strong underlying demand for E&E products. We expect demand for E&E to continue, as supported by Malaysia’s entrenched position in the global value chain and AI-related demand,“ Abdul Rasheed said. He added that about 30% of Malaysian exports to the US are exempted from tariffs, including key products such as semiconductors. “But there could be further announcements post-negotiation. We do not know, so we need to remain vigilant and take it as it comes.” The exports tend to be priced inelastic, he said, which means the quantity demanded will not drastically change in the short term when prices increase due to tariffs. “Examples of these products include electrical machinery, computer hardware, and optical and scientific equipment.” Furthermore, Abdul Rasheed said Malaysia’s export base is highly diversified, with no single country accounting for more than 15% of total exports. “We have a very well diversified export market and products. This is where you will mitigate in terms of the impact on Malaysia.” BNM noted that 31% of the surveyed firms reported negative impacts, citing factors such as lower final demand, general demand uncertainty, and higher business costs and prices. The survey findings were based on engagements with 36 export-oriented firms conducted between April 20 and May 13. - by HAYATUN RAZAK Abdul Rasheed said. “Moreover, the moderation also reflected dissipated effects of past domestic policies, which resulted in lower utility inflation, as well as lower inflation for mobile services amid price reductions for selected post paid plans. “Conversely, core inflation edged higher during the quarter due to higher rental inflation,” he added. – Bernama

KUALA LUMPUR: Bank Negara Malaysia (BNM) expects to revise its 2025 gross domestic product (GDP) growth forecast within the next one to two months and is refraining from immediate adjust ments to avoid making changes based solely on assumptions. “We want to wait for more incoming data and see the out come of the ongoing negotiations (on US Liberation Day tariffs announced in early April). We already published our forecast in late March using rather conser vative assumptions, but post Liberation Day announcements have gone beyond expectations,” governor Datuk Seri Shaik Abdul Rasheed Abdul Ghaffour said at a media briefing yesterday. BNM released its 2025 GDP growth forecast for Malaysia in late March, projecting an ex pansion between 4.5% and 5.5% for the year. The governor stated that BNM now expects growth to be slightly lower than previously projected. “We acknowledge that we need to do the revision. But we want to have some solid grounds for some of the assumptions.” He added that revising the outlook prematurely may not be healthy or positive for businesses. “This is important because if we have just come up with a revision and need to revise it again the next day, it will add further uncertainty to an already heigh tened environment.” The Malaysian economy expanded by 4.4% in the first o Malaysian economy expands by 4.4% in first quarter of 2025, driven by steady expansion in domestic demand Ű BY HAYATUN RAZAK sunbiz@thesundaily.com

Abdul Rasheed speaking at the press conference on Malaysia’s first-quarter 2025 GDP growth at Sasana Kijang in Kuala Lumpur yesterday. – BERNAMAPIC

quarter of 2025 (Q4’24: 4.9%), driven by the steady expansion in domestic demand, Abdul Rasheed announced at the briefing. Household spending was sus tained amid positive labour market conditions and income related policy measures, including the upward revision of minimum wage and civil servant salary. The expansion in investment activities was supported by reali sation of new and existing projects. In the external sector, export growth was slower due mainly to lower mining exports. This was partially offset by stronger electrical and electronics (E&E) exports and tourism activity. At the same time, import growth, although more moderate, continued to be driven by strong demand for capital goods, re flecting continued investment and

trade activities. On the supply side, growth was driven by the services and manu facturing sectors. The services sector was supported by higher government services while strong E&E pro duction underpinned the perfor mance in the manufacturing sector. However, normalisation in motor vehicle sales and pro duction following strong perfor mances over the last three years affected the growth of the services and manufacturing sectors, res pectively. Overall growth was weighed down by a contraction in the mining sector amid lower oil and gas production. On a quarter-on-quarter, seasonally adjusted basis, growth expanded by 0.7% (Q4’24: -0.2%). In the first quarter of 2025, the central bank said, the ringgit

remained broadly stable. The nominal effective exchange rate against the currencies of Malaysia’s major trade partners increased marginally by 0.01%. The ringgit appreciated by 0.8% against the US dollar, primarily driven by the weakening of the greenback as growing uncertainties over Washington’s trade policy resulted in increased expectations of more subdued US economic growth. External factors are expected to continue influencing the ringgit’s exchange rate. Notwithstanding that, Malaysia’s positive macroeconomic prospects supported by the ongoing imple mentation of structural reforms will provide medium-term support for the ringgit. BNM remains committed to ensuring the orderly functioning of the domestic foreign exchange market, Abdul Rasheed said.

Headline inflation expected to remain below 3% this year KUALA LUMPUR: Malaysia’s head line inflation is expected to remain moderate at below 3% in 2025, given the further easing in global cost conditions and the absence of excessive demand conditions, said Bank Negara Malaysia (BNM) governor Datuk Seri Abdul Rasheed Ghaffour. reviews the updated gross domestic product (GDP) projections in the near future. “Sustained moderation in global commodity prices will likely con tribute to continued moderate cost conditions. “Within this benign cost press conference on Malaysia’s first quarter 2025 (Q1’25) GDP perfor mance yesterday. Externally, risks to inflation may stem from uncertainties in global developments surrounding global commodity prices and financial markets, while trade policies among key economies could shape the path of inflation, he said.

overall impact of domestic policy reforms, particularly subsidy ration alisation. In Q1’25, headline inflation declined to 1.5%, while core inflation rose to 1.9% due to lower utilities and mobile services inflation, which was partially offset by higher rental inflation. “The moderation in headline inflation is broadly in line with the overall easing cost environment,

environment, the overall effect of the announced domestic policy reforms on inflation is expected to be limited,” Abdul Rasheed said during a

However, he said a new inflation forecast range will likely be announced as the central bank

Domestically, Abdul Rasheed said the outlook remains subject to the