Malaysia's 2025 growth forecast trimmed to 4.1pc in IMF's latest outlook
In its April 2025 World Economic Outlook, titled 'A Critical Juncture amid Policy Shifts', the fund also projected Malaysia's economy to expand by 3.8 per cent in 2026.
The IMF trimmed its global growth forecast for 2025 to 2.8 per cent, down 0.5 percentage point from its January estimate.
Among Malaysia's regional peers, the IMF cut Indonesia's 2025 outlook to 4.7 per cent from 5.1 per cent.
The Philippines is now expected to grow by 5.5 per cent, down from 6.1 per cent, while Thailand's forecast was revised to 1.8 per cent from 2.9 per cent.
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 invoked 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 2024, after a prolonged and challenging period of unprecedented shocks.
'Inflation, down from multidecade 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 economies and the ASEAN-5 (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.
On commodities, the IMF projected fuel prices to fall by 7.9 per cent in 2025, led by a 15.5 per cent drop in oil prices and a 15.8 per cent fall in coal prices. These declines are expected to be partially offset by a 22.8 per cent rise in natural gas prices, driven by colder-than-expected weather and the cessation of Russian gas flows to Europe via Ukraine since January.
Non-fuel commodity prices are forecast to increase by 4.4 per cent in 2025. — Bernama
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
14 minutes ago
- New Straits Times
Trade growth in first half of 2025 proves strength of Malaysia's external trade
KUALA LUMPUR: The record cumulative trade value increase of 4.8 per cent to RM1.465 trillion for the first half of 2025 reflects the strength and resilience of Malaysia's external trade position. Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Tengku Abdul Aziz said the country also saw encouraging export growth to major markets such as the United States, the European Union, Taiwan and Mexico. "The Ministry of Investment, Trade and Industry (MITI) and the Malaysia External Trade Development Corporation (Matrade) remain committed to building a stronger trade ecosystem by diversifying export markets and strengthening trade relations through free trade agreements (FTAs). Let us expand Malaysia's global reach," he said in a post on the X platform today. Tengku Zafrul said the country's trade surplus surged to RM8.59 billion in June, compared to RM759.9 million in May 2025, marking the 62nd consecutive month of surplus since May of 2020. He said key factors driving exports in June included palm oil and palm oil-based agricultural products, which recorded double-digit growth for 15 consecutive months. "This was also supported by increased exports of machinery, equipment and parts, as well as electrical and electronic (E&E) goods," he added.
The Sun
14 minutes ago
- The Sun
Malaysia reduces new debt to RM77 billion in 2024, says PM Anwar
PUTRAJAYA: Prime Minister Datuk Seri Anwar Ibrahim revealed that the government has successfully lowered annual new debt to RM77 billion in 2024, a significant drop from RM99 billion in 2022. Speaking at the Prime Minister's Department monthly assembly, he emphasised that this achievement aligns with the administration's commitment to prudent fiscal management. 'The new debt incurred was RM99 billion in 2022, dropping to RM93 billion in 2023 and further to RM77 billion in 2024. The government promised to reduce new debt, and we have fulfilled that,' Anwar stated. He dismissed claims that the government was increasing overall debt, clarifying that only interest payments on older debts remain unchanged. Anwar, who also serves as Finance Minister, highlighted the gradual reduction in the fiscal deficit from 5.5 per cent in 2022 to 4.1 per cent in 2024, with a target of 3.8 per cent this year. He explained that a measured approach ensures development projects and market confidence remain unaffected. 'We manage the national economy like a household. If income is RM5,000 but spending is RM7,000, that's a deficit. Now, we're reducing expenditure step by step,' he said. The Prime Minister also commended Malaysia's improved global competitiveness, noting an 11-place jump to 23rd in the IMD World Competitiveness Ranking 2025. This progress, driven by economic reforms and administrative efficiency, supports the MADANI Economy Framework's goal of placing Malaysia among the top 12 competitive economies by 2033. Anwar cited the International Monetary Fund's (IMF) approval of Malaysia's fiscal reforms, including the Public Finance and Fiscal Responsibility Act (FRA), as evidence of the government's disciplined approach. – Bernama
New Straits Times
14 minutes ago
- New Straits Times
Status quo of low OPR until June 2026: Expert
KUALA LUMPUR: The current low interest rate environment, following Bank Negara Malaysia's move to cut the Overnight Policy Rate (OPR) by 25 basis points, may remain at least until the first half of next year, an expert said. CIMB Bank Bhd chief investment office Ng Boon Hoa said Bank Negara appears to be taking a cautious approach in supporting the nation's economic growth. This is particularly in light of the risks from a potential global slowdown and the uncertainty surrounding Malaysia's yet-to-be-finalised tariff negotiations, he added. "We expect Bank Negara to maintain the current interest rate at 2.75 per cent at least until mid-2026. "It is rather difficult to make precise projections for 2027 and beyond, as external factors are constantly changing," he said during the presentation of CIMB's Asean Market Outlook in conjunction with the bank's Asean media day here today. According to Ng, the recent rate cut was a preemptive measure to absorb near-term uncertainties in economic growth. "If the current rate successfully spurs growth, Bank Negara is likely to remain comfortable with this level. Rate hikes would only be considered if there is significant strengthening in growth, possibly in 2027 or 2028, and even then, likely only once or twice," he said. Commenting on foreign fund flows, Ng said the domestic bond market is currently benefiting from these inflows, which in turn enhances liquidity in the financial system and supports lower borrowing costs. However, he cautioned that excessive inflows could risk contributing to inflationary pressures over the longer term and would require close monitoring by the monetary authorities. "Foreign funds can flow in and out quickly. We need to be cautious. The ringgit has shown some strengthening thanks to these inflows, but currency movements can change abruptly," he said. He pointed to the one per cent depreciation of the ringgit against the US dollar over the 20-day period since the end of June as an example of the uncertainties facing the local market.
