GDP may ease to 4pct if US tariffs stay — analyst
CIMB Securities, which maintains a baseline GDP growth forecast of 4.3 per cent for 2025, said the downside risk stems mainly from a potential drag on external demand.
Malaysia's exports contracted 3.5 per cent year-on-year in June, extending the 1.2 per cent decline in May and missing market expectations for a rebound.
The firm said the weakness was broad-based, led by slower shipments of electrical and electronics (E&E), palm oil-based products and metal exports, alongside a sharp drop in crude oil and liquefied natural gas exports.
Manufacturing exports fell 3.3 per cent in June, weighed down by a deceleration in E&E growth to 1.3 per cent from seven per cent in May. Mining exports dropped 28.7 per cent, while agriculture shipments rose 17.5 per cent on stronger palm oil exports.
CIMB Securities said front-loading activity, where exporters rush orders ahead of potential tariffs, had eased, particularly to the US, Taiwan and South Korea.
Exports to the US rose just 4.7 per cent in June compared with a 16.1 per cent jump in May. Similarly, shipments to Taiwan grew 14.2 per cent versus 41.4 per cent previously, while exports to South Korea turned negative at -13.5 per cent.
Shipments to major regional partners also weakened. Exports to China fell 9.3 per cent year-on-year, while those to Asean dropped 13.8 per cent. Exports to the European Union and Hong Kong also moderated.
"With export front-loading easing, Malaysia's growth outlook is clouded by persistent global trade uncertainties and an uneven domestic recovery," the firm said.
Malaysia's trade surplus widened to RM8.6 billion in June as imports also slowed, rising 1.2 per cent from a year ago versus 6.6 per cent in May.
The moderation was largely due to slower capital goods imports, though consumption and intermediate goods imports saw some rebound.
For the first half of 2025, the economy expanded by 4.4 per cent, down from 5.0 per cent in the same period last year.
CIMB Securities maintained its full-year GDP forecast at 4.3 per cent but flagged that the outcome of US-Malaysia tariff negotiations could tilt the balance.
"The sustainability of trade and investment momentum beyond the 90-day US tariff pause remains uncertain," it said.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
29 minutes ago
- New Straits Times
Analyst: Malaysia leans on quiet engagement to seek favourable tariffs revision
KUALA LUMPUR: Malaysia remains locked in quiet engagement and possibly embracing a deliberate positioning with the United States (US) to lower the 25 per cent tariffs on its exports to the American markets as the Aug 1 deadline approaches. Unlike other Asean countries, which have struck quick deals with Washington, SPI Asset Management managing partner Stephen Innes said Malaysia's more measured response to the impending US tariffs likely reflects deliberate positioning rather than passivity. He said that contrary to countries pursuing headline-grabbing diplomacy, Malaysia often leans on quiet engagement and multilateral cooperation to navigate complex trade tensions. With the Aug 1 deadline nearing, exporters and investors are keeping a close watch on the outcome of these negotiations, which would reshape the cost dynamics of doing business between Malaysia and its third-largest trading partner. While regional peers such as Indonesia and Vietnam have already struck last-minute deals to reduce their tariffs to 19 per cent and 20 per cent, respectively, Malaysia is still seeking favourable terms that safeguard local industries without compromising national interests. The proposed tariffs — a revival of protectionist measures introduced during President Donald Trump's first term — have stirred fresh uncertainties across Southeast Asia, where economies are deeply embedded in global supply chains. Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz has described the ongoing talks with the US as progressing well, with emphasis on striking a balanced outcome. "This low-profile approach fits with Malaysia's broader strategy, namely maintaining economic openness, avoiding entanglement in great power rivalries, and preserving regional alignment within Asean. "By staying restrained, Malaysia may be aiming to protect its long-term credibility as a stable, rules-based partner," said Innes. That said, he cautioned that the exposure is real as Malaysia's export economy is heavily tilted toward electrical and electronic goods, precision machinery, and intermediate components, many of which plug directly into US-bound supply chains. A 25 per cent tariff could disrupt flows, especially in semiconductors, sensors, and specialised modules that are difficult to reroute, he said. "The pain would be felt most in hubs like Penang, where small and medium enterprises and multinationals are deeply intertwined. "While some firms could shift volumes elsewhere, the high-tech nature of these exports makes substitution harder than it sounds," said Innes. The absence of a bilateral Free Trade Agreement (FTA) with the US limits Malaysia's negotiating toolkit, but Innes believed it doesn't shut the door entirely. He pointed out that Malaysia remained strategically important to US firms seeking reliable, non-China supply bases, which provides leverage particularly if Malaysia targets exemptions for specific sectors tied to US industrial or security interests, such as chip packaging or electric vehicle components. While countries like Indonesia have dangled major purchases to secure tariff relief, Malaysia's options are different, Innes said. "It is unlikely to buy its way into a deal with big-ticket orders. Instead, it can offer alignment, which is co-investment opportunities in green tech, digital infrastructure, or rare-earth refining," he said. According to Innes, these would support Malaysia's industrial roadmap while offering Washington something it values: supply chain resilience and diversification, but from a policy standpoint, the trade-off is nuanced. He noted that offering short-term concessions or budget support might help shield critical sectors from long-term dislocation. "But any deal must be carefully structured. It should channel benefits beyond just large exporters towards local suppliers, workers, and tech development ecosystems," said Innes, highlighting that if no deal is reached, the impact may not be catastrophic at a national level, but could be meaningful in key sectors. "Export growth could slow, investment plans may be paused, and employment could tighten in affected industries. The greater risk is longer-term: losing ground in a global supply chain reshuffle that increasingly rewards agility and alignment. Malaysia still has room to move, but the window is closing," he added. Meanwhile, Moody's Analytics economist Denise Cheok said Malaysia's economic exposure to the US through value-added trade is more significant than headline export figures suggest. Citing calculations based on OECD Trade in Value Added (TiVA) data, Cheok said that Malaysian domestic value added embedded in foreign final demand to the US accounted for slightly over 5.0 per cent of the country's gross domestic product. She noted that this includes not only direct exports of final goods but also intermediate components that eventually reach the American consumers and provide a more comprehensive measure than gross exports alone. "This compares to over 9.0 per cent of GDP for Singapore, which is highly trade-exposed, and about 2.0 per cent of GDP for Indonesia, which is more domestically focused and not as reliant on exports to the US," Cheok said. If the full 25 per cent tariff is imposed without any rerouting of supply chains, Cheok estimates the impact could shave up to 2.6 per cent off Malaysia's GDP in 2025, with the effects likely to be uneven across sectors. "The key manufacturing sector is likely to be hit hard — not only by the direct impact of the tariffs but also by global supply chain disruptions caused by the uncertainty surrounding tariff policies," she said. Cheok added that Malaysia, like many of its Southeast Asian peers, relies heavily on exports as part of its growth model, and structural changes to this would be difficult, even in the long term. "The fractured relationship between the US and its trading partners will likely continue beyond the next three years, and Malaysia should continue strengthening its trade relations with other economies, including Asean, as a counterbalance to this," she said. — BERNAMA
Borneo Post
29 minutes ago
- Borneo Post
Abang Johari in Jakarta for pre-meeting ahead of Malaysia-Indonesia Annual Consultation
Abang Johari's arrival at Jakarta today – Photo from Ukas KUCHING (July 28): Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg has arrived in Jakarta with the Sarawak government delegation to attend a pre-meeting session in conjunction with Prime Minister Datuk Seri Anwar Ibrahim's official visit to Indonesia and the 13th Annual Malaysia–Indonesia Consultation today. According to a report from Sarawak Public Communications Unit (Ukas), Abang Johari and his delegation landed safely at Halim Perdanakusuma International Airport at 11.17am local time before heading to Hotel Indonesia Kempinski Jakarta. He was accompanied by Sarawak State Secretary Datuk Amar Mohamad Abu Bakar Marzuki and Deputy Minister for Utility and Telecommunication (Sarawak Energy Berhad and PETROS) Dato Ibrahim Baki. During his stay in Jakarta, he is scheduled to join Anwar in several official programmes, including a meeting with senior editors from Indonesian media and members of the Malaysia-Indonesia Journalists' Friendship Association (ISWAMI), as well as a bilateral meeting with Indonesian President Joko Widodo at the Merdeka Palace on Tuesday. The programme will also see the signing of a Memorandum of Understanding on health cooperation between Malaysia's Minister of Foreign Affairs and Indonesia's Minister of Health. Both delegations are then scheduled to hold the 13th Annual Consultation session, which is an important platform for strengthening Malaysia-Indonesia bilateral ties. Abang Johari will also join the Malaysian delegation for a visit to the ASEAN Secretariat in Jakarta. The visit includes a tree-planting ceremony, a group photo session to mark Malaysia's ASEAN Chairmanship in 2025, a guest book signing, and the symbolic handover of a painting to reaffirm regional cooperation. Abang Johari Tun Openg anwar ibrahim bilateral ties Indonesia-Malaysia lead
New Straits Times
an hour ago
- New Straits Times
New Zealand plans to scrap card payment surcharges
SYDNEY: The New Zealand government on Monday proposed to ban surcharges on most in-store payments made using debit and credit cards from May next year, a move it said could save roughly NZ$150 million (US$90.20 million) for Kiwi consumers. The plan follows the decision last year by New Zealand's Commerce Commission to lower fees that local businesses pay to accept Visa and Mastercard payments. "We are scrapping surcharges at the till. New Zealanders are paying up to NZ$150 million in surcharges every year. That's money that could be saved or spent elsewhere," Prime Minister Christopher Luxon told reporters. "You no longer will be penalised for your choice of payment method, whether that's tapping, swiping, or using your phone's digital wallet." Visa and Mastercard both welcomed the decision. Banning surcharges was "a welcome win for transparency and fairness at the checkout for consumers and reflects Visa's long-held view on surcharging globally," Anthony Watson, country manager for New Zealand and South Pacific, said. A spokesperson for Mastercard said the ban aligns New Zealand "with other leading economies at a time when payment acceptance costs have never been lower". The proposed ban will not include online payments or transactions made using foreign-issued cards, prepaid, travel and gift cards. New Zealand's Commerce Commission estimates consumers pay about NZ$150 million in surcharges annually, including up to NZ$65 million in excessive surcharges. "Surcharges cover the fees businesses pay for accepting contactless payments and credit cards, but we know these are often excessive. In some cases, the retailer doesn't even make it clear what the percentage is," Commerce Minister Scott Simpson said in a statement. The government plans to introduce the bill to ban most card surcharges by the end of this year. Shops in New Zealand typically charge consumers around 0.7 per cent for debit card payments and up to 2 per cent for credit card payments, according to New Zealand's Commerce Commission. Australia's central bank this month proposed to scrap surcharges on most debit and credit card payments for consumers, saying it no longer achieved the intended purpose of steering consumers to make more efficient payment choices.
