IMF raises Malaysia's GDP growth forecast to 4.5% in 2025
In its July 2025 World Economic Outlook (WEO) update released today, titled 'Global Economy: Tenuous Resilience amid Persistent Uncertainty', the IMF said the forecast for 2025 is 0.4 percentage point higher than in the reference forecast of the April 2025 WEO and 0.2 percentage point higher for 2026.
Meanwhile, the IMF said that in the emerging market and developing economies, growth is expected to be 4.1 per cent in 2025 and 4.0 per cent in 2026.
'Relative to the forecast in April, growth in 2025 for China is revised upward by 0.8 percentage point to 4.8 per cent. This revision reflects stronger-than-expected activity in the first half of 2025 and the significant reduction in US-China tariffs,' it said.
Additionally, it said China's growth in 2026 is also revised upward by 0.2 percentage point to 4.2 per cent, again reflecting the lower effective tariff rates.
'In India, growth is projected to be 6.4 per cent in 2025 and 2026, with both numbers revised slightly upward, reflecting a more benign external environment than assumed in the April reference forecast,' it said.
The IMF highlighted that despite global uncertainties, countries should reduce policy-induced uncertainty by promoting clear and transparent trade frameworks.
'Pragmatic cooperation is paramount in instances in which some rules of the international trading system, in their current form, may not be functioning as intended.
'This entails the pursuit of multilateral initiatives on the global commons and modernising trade rules where feasible, while seeking plurilateral or regional solutions on other matters,' it said.
Moreover, the IMF said bilateral negotiations can help defuse trade tensions and should aim to reduce trade and investment barriers while not increasing them toward third parties, which could escalate tensions with other trading partners.
'Such negotiations should be pursued with the ultimate aim of addressing the root causes of tensions: specifically, excess external imbalances arising from internal policy choices. This would involve identifying and taking steps to resolve the underlying distortions for a more durable solution.
'Broad subsidies and industrial policies aiming to protect exports can be costly and distortive,' it said.
The IMF said central banks must carefully calibrate monetary policies to country-specific circumstances to maintain price and financial stability amid prolonged trade tensions and evolving tariffs.
'In countries imposing tariffs on trading partners -- either by initiating or by retaliating -- these actions constitute supply shocks.
'Hence, central banks in these countries face a difficult trade-off between shielding the real sector and preventing the expected one-off increase in prices from turning into persistently higher inflation. The trade-off becomes more pertinent if inflation is already above target,' it said.
According to the report, further easing of monetary policy should then depend on having convincing evidence that inflation and inflation expectations are heading decisively back to target.
'Countries that have not imposed tariffs, by contrast, face a demand shock. Central banks could, in this case, gradually reduce the policy rate,' it said. - Bernama
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
7 minutes ago
- The Star
Washington trade talks with India have stalled, sources say
US-India trade talks appear to have stalled, according to two sources familiar with the matter, as both sides remain unwilling to compromise on opening India's agriculture and dairy markets to US products. Before US President Donald Trump announced on Wednesday that he would impose 25 per cent tariffs on imports from the country, the Indian side was expected to visit. However, Indian negotiators will not be coming to Washington in mid-August as a planned follow-up to their previous meeting about two weeks ago, according to one person familiar with the issue. A scheduled trip by the US Trade Representative Jameison Greer to New Delhi later in the month also appears unlikely if the two sides do not reach a consensus on market access. The apparent setback follows five rounds of negotiations between April and July after Trump threatened India with 26 per cent so-called reciprocal tariffs on April 2. Adopting a harsh tone on India in a social media post on Thursday, Trump called the Indian economy 'dead', saying, 'we have done very little business' with the South Asian country because of 'too high' tariffs. 'I don't care what India does with Russia. They can take their dead economies down together, for all I care,' he wrote, referring to India's import of Russian oil and defence equipment. On Wednesday, he threatened a 'penalty' on India for buying Russian oil and defence equipment without making it clear what that penalty could be. India's agricultural sector supports the livelihoods of roughly 42 per cent of the country's population, making Trump's demand for access politically risky for Prime Minister Narendra Modi and ratcheting up tension between Washington and the world's most populous country. One of the sources said the mood in New Delhi felt 'bitter', while both sources said the US negotiators have remained firm in demanding a 'complete' opening of the Indian market, an approach India has rejected to protect its domestic industries and farmers. Last week, another person familiar with the matter had described the talks as a 'total mess' behind the scenes, adding that agriculture was a political no-go zone for Modi's government. US Treasury Secretary Scott Bessent on Thursday told CNBC that 'the whole trade team has been frustrated' with India, saying the country has not been a 'great global actor'. 'India's red lines on agriculture and dairy are probably inviolable,' according to Rick Rossow, chair in US-India Policy Studies at the Center for Strategic and International Studies, a Washington think tank. If the US demands that these areas be opened as part of any deal, he said, 'we may never conclude an agreement'. According to Rossow, Greer will only make the trip to New Delhi 'if there is a realistic chance of resolving any pending issues in the deal". 'If it looks like an empty trip – circling the drain on the last issues without hope of a breakthrough – the visit might be cancelled,' he said. One source said India wants its recent free trade agreement with Britain, which opened British markets to Indian agricultural and textile products, among others, to serve as a model for a deal with the US. Meanwhile, the US side views its recent trade agreement with South Korea, which Trump claimed opened Korean agricultural markets to American goods, as the kind of access it expects from New Delhi. Another source familiar with the thinking on the US side said that Trump has also been keen on some headline-worthy announcements that include big investments or significant energy and defense purchases. Rossow said he suspects that a Phase 1 deal will 'not vary dramatically from the other deals India has signed.' He added that India seemed 'willing to commit to some big announcements in terms of investment and government-directed purchases in areas like hydrocarbons.' 'With President Trump's characterisation of Prime Minister Modi as the 'tariff king' paired with the enormous size of the Indian market, the deal itself will be big news – if and when it's concluded,' Rossow said. India's membership in Brics, a bloc of emerging Global South economies, and Trump's closeness with Pakistan have also become irritants in the US-India relationship. Hours after announcing new tariffs on India, the US president said his team had reached a deal with Islamabad and criticised New Delhi's active role in Brics. 'Brics, which is basically a group of countries that are anti-the United States, and India is a member of that if you can believe it ... It is an attack on the dollar and we are not going to let anybody attack the dollar. So it's partially Brics and it's partially trade,' Trump told reporters on Wednesday. On the other hand, the deal with Pakistan, according to Trump, allows the two countries to 'work together on developing their massive oil reserves'. As per an executive order signed by Trump on Thursday, a 19 per cent tariff will be imposed on imports from Pakistan. The US is one of Pakistan's top export destinations. India's arch-rival sold over US$5 billion worth of goods to the US last year and imported about US$2.1 billion. In June, Pakistan's army chief, Field Marshal Asim Munir, met with Trump at the White House. He offered Pakistan's support in such sectors as crypto and critical minerals. 'India is still an important partner for the United States and vice versa; a success on the trade talks would have been a strategic win, especially under the complex regional circumstances, but all is not lost yet,' according to Farwa Aamer, director of South Asia Initiatives at the Asia Society Policy Institute. New Delhi is 'cautious but committed', she said. 'As deals come through with its neighbours and competitors, it may just provide it enough impetus to make bold moves and accelerate progress on negotiations on a more comprehensive deal while weathering the temporary storm,' she said. - SOUTH CHINA MORNING POST
Malay Mail
37 minutes ago
- Malay Mail
Bursa eyes higher ground next week on US tariff boost, 13MP momentum
KUALA LUMPUR, Aug 2 — Bursa Malaysia is likely to trade higher next week, supported by improved investor sentiment following the reduction in United States (US) tariffs and the upcoming debate on the 13th Malaysia Plan (13MP) during the Parliamentary sitting beginning Aug 4. UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research, Mohd Sedek Jantan, said the FTSE Bursa Malaysia KLCI (FBM KLCI) is expected to trade within the 1,545 to 1,555 range. He noted that export-oriented stocks are expected to lead the rebound, with technology counters poised to benefit benefit from both global supply chain repositioning and the country's ongoing digitalisation agenda. 'The 13MP unveiled by the Prime Minister Datuk Seri Anwar Ibrahim on Thursday anchors the medium-term policy around geoeconomic resilience, supply chain realignment, and digital transformation. 'Of particular note is the plan's emphasis on artificial intelligence, which reinforces our constructive view on the long-overdue re-rating of the technology sector,' he told Bernama. Mohd Sedek also noted that recent domestic data supports the case for recovery, highlighting the S&P Global Malaysia Manufacturing Purchasing Managers' Index (PMI), which rose for the third consecutive month—from 49.3 in June to 49.7 in July. 'While the index remains just below the expansion threshold, the steady improvement signals ongoing stabilisation in the manufacturing sector,' he said. Furthermore, Malaysian equities remain undervalued compared to regional peers as investors shift their focus to China's July trade data, which is due next Thursday. 'As such, we remain cautiously optimistic that foreign investors will return as net buyers, particularly as they look to diversify away from the overstretched US equity markets. On a weekly basis, the benchmark index eased 0.41 of-a-point to 1,533.35 on Friday from 1,533.76 a week earlier. The FBM Emas Index increased 18.51 points to 11,525.33, the FBMT 100 Index gained 15.91 points to 11,285.63, and the FBM Emas Shariah Index climbed 11.78 points to 11,540.76. The FBM 70 Index increased 106.305 points to 16,607.57 while the FBM ACE Index dropped 14.65 points to 4,624.37. By sector, the Financial Services Index put on 25.97 points to 17,480.2, the Energy Index went up 9.75 points to 749.60, while the Plantation Index decreased 63.82 points to 7,370.97. Weekly turnover expanded to 15.94 billion units worth RM11.88 billion from 11.92 billion units worth RM11.43 billion in the previous week. The Main Market volume swelled to 8.33 billion units valued at RM10.46 billion compared with 6.63 billion units valued at RM9.70 billion previously. Warrants turnover declined to 5.50 billion units worth RM859.03 million from 7.10 billion units worth RM1.15 billion in the preceding week. The ACE Market volume improved to 2.10 billion units valued at RM561.51 million versus 1.68 billion units valued at RM577.05 million a week ago. — Bernama
Free Malaysia Today
2 hours ago
- Free Malaysia Today
US end of parcel tax relief threatens eBay, Etsy trade
Duty-free access for low-value parcels from China and Hong Kong ended in May, disrupting ecommerce flows for online retailers like Shein and Temu. (EPA Images pic) NEW YORK : Americans shopping for secondhand, vintage or handmade items on platforms like eBay and Etsy face steep customs duties on international purchases next month, potentially hurting trade on those peer-to-peer sites. In a surprise move late on Wednesday, US President Donald Trump ordered the removal of 'de minimis' duty-free treatment on parcels under US$800 from all countries, starting Aug 29 – bringing forward a change previously set for July 2027. The acceleration follows pressure from groups that argue the exemption facilitates fentanyl smuggling and has led to a flood of cheap products entering the US duty-free, undermining US retailers and manufacturers. Trump ended duty-free access for low-value parcels from China and Hong Kong at the start of May, disrupting ecommerce flows for online retailers like Shein and Temu. After asking for feedback on widening the removal of de minimis, some US businesses had spoken out against the policy. 'These exemptions are a powerful tool that helps small creators, artisans, and makers participate in and navigate cross-border trade,' Etsy's global head of public policy and advocacy Jeffrey Zubricki wrote in a submission to Customs and Border Protection in March. 'Many American Etsy sellers rely on de minimis to import and export products with key trading partners, sustaining their businesses and generating income to support their families.' The majority of Etsy's 5.6 million active sellers and nearly 90 million buyers are in the US. Etsy did not immediately respond to a request for comment on Thursday. eBay also urged the customs agency to reconsider, arguing that de minimis gives American consumers access to 'a global market to find value at lower prices, particularly for used goods and a unique, collectible inventory that is not available domestically'. In a results call on Wednesday, eBay CEO Jamie Iannone flagged the elimination of de minimis outside of China as a potential disruption that may impact revenue. eBay did not immediately respond to a request for comment. Goods shipped through the postal system will face one of two tariffs: either an 'ad valorem duty' equal to the effective tariff rate of the package's country of origin or, for six months, a specific tariff of US$80 to US$200 depending on the country of origin's tariff rate. It is the latest headache for small businesses grappling with hefty import tariffs imposed by Trump, driving up costs, forcing many to hike prices and fuelling concerns that Americans will be paying more for everyday goods. 'The complexity of doing business with the US has gone to levels nobody could have imagined,' said Andrew Wilson, deputy secretary general of the International Chamber of Commerce. He also questioned whether US authorities can handle the tariff collections, potentially leading to delays and backlogs. 'Is border trade equipped to manage the checks and duties collection? If not, what happens with customs backlogs? It's a huge additional burden from next month,' said Wilson.
