IMF Cuts Malaysia's GDP Forecast To 4.1%
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. Related
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Sun
2 hours ago
- The Sun
Timor-Leste's ASEAN membership to boost regional reach and partnerships
KUALA LUMPUR: After 26 years, the Association of Southeast Asian Nations (ASEAN) is set to welcome its first new member since 1999 as Timor-Leste nears full accession. This milestone carries significant implications for both the nation and the regional bloc amid shifting geopolitical and economic dynamics. Timor-Leste's inclusion is expected to reinforce ASEAN's strategic influence and global relevance. Political analyst Professor Camilo Ximenes Almeida from the National University of Timor-Leste highlighted the potential for joint economic growth and regional stability. 'The integration of Timor-Leste represents a strategic opportunity for ASEAN, expanding its interregional relations and fostering a stronger, more united bloc,' he told Bernama. The path to membership has been long. Timor-Leste, Southeast Asia's youngest nation, applied in 2011, nine years after gaining independence in 2002. Despite challenges, Dili has shown strong commitment to meeting ASEAN's rigorous requirements. In November 2022, ASEAN granted Timor-Leste observer status, allowing participation in meetings and summits. With a population of 1.3 million, Timor-Leste relies heavily on oil and gas exports, though agriculture and services are growing contributors to its economy. The country recorded a GDP growth of 4% in 2024, up from 2.4% in 2023. Malaysia has played a key role in supporting Timor-Leste's bid, including a US\$200,000 pledge to the ASEAN Secretariat and technical assistance through the Malaysian Technical Cooperation Programme (MTCP), which has trained 319 Timorese officials. 'This support strengthens bilateral ties and underscores ASEAN's inclusivity,' Ximenes noted. Timor-Leste's membership could also introduce new dynamics, particularly in peace-building. Its reconciliation experience may serve as a model for other ASEAN members, including Myanmar. Additionally, Timor-Leste's Lusophone heritage could enhance ASEAN's ties with Portuguese-speaking regions in Europe, Africa, and Latin America, fostering trade and cultural exchanges. Full membership is expected to be formalised at the 47th ASEAN Summit in October, pending completion of the Full Membership Roadmap, which covers political, economic, and socio-cultural criteria. ASEAN, founded in 1967, currently has 10 members, with Cambodia being the last to join in 1999.
The Star
2 hours ago
- The Star
US tariffs will have significant impact on Lao economy, economists warn
VIENTIANE: Tariffs imposed by the United States on goods imported from Laos and other trading partners are projected to have a significant impact on Laos' economy in 2025 and 2026, economists have warned. The tariffs, and the ensuing global slump that is likely to result from the high levies, will result in a decline in demand and foreign direct investment (FDI) inflow. The impact on Laos' key trading partners and foreign investors, namely China, Thailand, Vietnam and the European Union (EU), will seriously hurt Laos' growth. 'Declining economic growth in these countries will affect their demand for goods imported from the Lao PDR as well as FDI inflow and tourist arrivals into Laos,' the National Economic and Social Science Institute warned in its economic assessment released on Friday (June 27). In 2024, exports from Laos to its top three trading partners — Thailand, China, and Vietnam — accounted for 82.4 per cent of the country's total exports, amounting to US$8.176 billion. These countries are also the top three foreign investors and key sources of foreign visitors to Laos. The United States' reciprocal tariffs are forecast to remarkably impact the global economy. The International Monetary Fund (IMF) has projected that the global economy will experience slower growth to 2.8 and 3 per cent in 2025 and 2026 respectively, a drop from 3.2 per cent in 2024. Tariffs as high as 48 per cent of the value of goods imported from Laos were cited when the world's largest economy announced on April 2 that it would impose reciprocal tariffs on its trading partners. However, the rollout of the tariffs has been paused for 90 days from April 9 to allow time for negotiations. Despite being a small economy, Laos has been penalised with a high levy determined by the United States based on the perceived trade deficit, according to the report by the National Economic and Social Science Institute. But the Lao government argues that there is a huge discrepancy in the trade figures. The US cites a trade deficit of over US$762 million in 2024, while statistics from the Lao Ministry of Industry and Commerce show a trade surplus of just over US$42 million. Laos exports to the US totalled US$283.8 million, while imports from the United States were valued at US$241.6 million. The main goods exported from Laos to the US included furniture, mattresses, lamps, electrical appliances and equipment, finished chemical products, clothes, headgear, inorganic chemicals and footwear. Key imports comprised wood and paper products, mechanical equipment, animal feed, vehicles and automobile spare parts. Given the huge difference in the figures, Prime Minister Sonexay Siphandone sent an official letter to President Donald Trump on April 7 - two days before the pause was announced. In the letter, the Lao government highlighted the differences and proposed that negotiations be carried out by both countries' trade agencies to establish common ground. While the United States' broader tariffs policy will have a significant impact on Laos, the increased levy imposed on Laos will have only a minor direct impact, given the relatively low value of bilateral trade, the report added. In 2024, Laos exports to the US accounted for just 2.9 per cent of total exports. In addition, Laos' exported goods fell into the labour-intensive, low value category, which are in high demand by US consumers. 'The US still needs to import these goods from the Lao PDR or other developing countries because the production cost of these goods in the US is high,' the report said, adding that the price of these imported goods plus the new tariff would still be lower than if they were made in the United States. However, the Lao economists who compiled the report acknowledged that local producers might suffer from declining orders from exporters, which would reduce their incomes and cut jobs. The economists cited disruption caused by the tariff changes as a key reason for Laos' economy being forecast to experience slower growth rates of 3.9 and four per cent in 2025 and 2026 respectively, a drop from 4.3 per cent recorded in 2024. As the pause deadline of July 9 approaches, the United States and its multiple trading partners are engaged in negotiations to reach deals to ease the situation. The report stated that if the United States goes ahead with the high levies, a notable impact on global growth, including in Laos, is inevitable. Given that the value of two-way trade is low, Director of the Macro Economic Research Institute under the National Economic and Social Science Institute, Latdavanh Songvilay, said the direct impact might be only minor. But the indirect impacts caused by the broader increased tariff policy could be enormous. 'The indirect impact is expected to be huge due to a projected decline in exports because the demand from trading partners would diminish, along with FDI and tourist arrivals,' she added. - Vientiane Times/ANN
The Sun
2 hours ago
- The Sun
Malaysia and Indonesia to resume annual consultation in Jakarta
PUTRAJAYA: Malaysia and Indonesia will restart their annual consultation, last held in 2017, following discussions between Prime Minister Datuk Seri Anwar Ibrahim and Indonesian President Prabowo Subianto. The meeting is scheduled for July 29 in Jakarta, alongside ASEAN-related events. Communications Minister Datuk Fahmi Fadzil confirmed the decision, highlighting the positive atmosphere during Anwar's recent visit to Indonesia. The consultation will serve as a platform for both leaders to address bilateral issues, including the long-standing Ambalat maritime boundary dispute. Fahmi noted that the Ambalat issue, unresolved for decades, remains a priority but stressed that discussions would mark the beginning of a resolution process rather than an immediate conclusion. Foreign Minister Datuk Seri Mohamad Hasan previously emphasised Malaysia's commitment to a win-win solution. The leaders also reaffirmed plans to enhance strategic cooperation in trade, security, and joint maritime development. The upcoming talks aim to strengthen diplomatic ties and foster regional stability.
