Malaysia’s 2025 GDP may be revised downward due to tariffs, says BNM governor

KUALA LUMPUR: Malaysia’s GDP growth forecast for 2025, currently projected at between 4.5 per cent and 5.5 per cent, may need to be revised downward due to the impact of tariffs, said Bank Negara Malaysia (BNM).

However, the central bank is not rushing to adjust the forecast, as the situation is still developing, said BNM governor Datuk Seri Abdul Rasheed Ghaffour.

“Certainly, this (Malaysia’s growth) will need to be marked out. But we are not in a rush to do it because we need to see how it (the reciprocal tariffs) unfolds.

“For example, it depends on how the negotiations and potential retaliatory measures play out,” he said at the International Monetary Fund (IMF) Annual and Spring Meetings in Washington yesterday.

He was one of the distinguished speakers at the forum titled “Governor Talks – The Future Ahead: Malaysia and ASEAN in a Changing Landscape”.

The central bank governor acknowledged that while BNM had factored in some downside risks in its latest economic projections released in March, the developments following Donald Trump’s announcement were entirely unexpected.

“We just came out with our annual report last month, and, at that point, we have taken into account some assumptions (which) we believe were rather conservative.

“But what came up was even different, surprised, not just in Malaysia but I believe the whole world,” he added.

On April 2, 2025, the United States president announced a series of reciprocal tariffs affecting countries across the board, including a 24 per cent tariff on Malaysian goods, which is currently paused.

Yesterday, the IMF downgraded Malaysia’s real GDP growth forecast for 2025 to 4.1 per cent from 4.7 per cent, reflecting a broader downward revision across the region.

Despite external headwinds, Abdul Rasheed emphasised that Malaysia is entering 2025 from a position of strength underpinned by solid domestic fundamentals.

“We started with a strong growth last year, at 5.1 per cent, surpassing our earlier projections. This was primarily driven by robust domestic demand, increased investment, and strong goods exports.

“But again, I think this is something that we will be monitoring closely, and we are vigilant in terms of the financial impact that is coming on board. We will react accordingly,” he emphasised.

Abdul Rasheed also said Malaysia has sufficient liquidity in the country to fund investment and attract both foreign direct investment (FDI) and domestic direct investment (DDI).

He noted that Malaysia saw strong investment last year, with significant contributions from both FDI and DDI, with a larger proportion from DDI.

“We have got a lot of interesting projects coming from the national plans that were announced two years ago.

“These high-quality investments create higher value-added activities, create high-income jobs and have strong domestic economic linkages, which will support growth in 2025,” Abdul Rasheed said.

Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz is currently in Washington to meet with US Trade Representative Jamieson Greer and other relevant officials today.