Global economic growth expected to slow to 3.1% this year: Labuan authority chief
KUALA LUMPUR: Global economic growth is expected to moderate to 3.1% this year from 3.2% in 2024, driven by the prolonged impact of high US tariffs which continue to disrupt international trade stability and trigger market uncertainty.
Labuan Financial Services Authority director-general Nik Mohamed Din Nik Musa said the US's protectionist stance has raised concerns over a potential trade war that could further dampen global growth and increase volatility in key markets, including Asean.
'Despite these challenges, emerging Asian economies remain the main engine of global growth.
'Although China's growth is projected to slow by mid-2024, several other major economies continue to display strong momentum,' he said during the launch of the 2024 Market Report for the Labuan International Business and Financial Centre here recently.
Nik Mohamed Din said the International Monetary Fund has emphasised that stable economic conditions in some countries offer opportunities to strengthen macroeconomic policies and implement long-term structural reforms.
'India remains the fastest-growing economy with a growth rate of 6.4%, while China and Indonesia continue to contribute significantly to Asia's economic progress,' he explained.
Furthermore, Nik Mohamed Din noted that the US is projected to expand by only 2.2% in 2025.
'Malaysia retains strong economic fundamentals, but this year's performance still hinges on tariff policy shifts and developments in an increasingly challenging global landscape,' he said.
Asean, he added, stands to benefit from the shifting of global supply chains away from China, as more manufacturers relocate operations to countries such as Vietnam, Thailand, Indonesia and Malaysia to take advantage of more competitive labour costs and to avoid high tariffs.
Nik Mohamed Din said, '68.2% of Malaysia's exports are concentrated in Asean, China, the US, the European Union and Hong Kong, involving key products such as electrical and electronic goods, petroleum, palm oil, chemicals, as well as machinery and equipment.'
Industrial activity is also on the rise, with new factories, warehouses and service hubs being developed across the region he added.
On global oil prices, Nik Mohamed Din said the sector has seen a significant drop to its lowest levels since the Covid-19 pandemic, driven by ongoing uncertainty and expectations of increased output from Opec+ starting in April.
'While the decline affects oil-producing countries, it benefits importers like Malaysia by helping to manage production costs.'
In a related development, he noted that major stock markets in the US, Europe and Asia have recorded declines, with financial, technology and export sectors being the hardest hit. 'The US dollar has also weakened, while currencies such as yen, euro and peso have strengthened in response to current trade policies,' Nik Mohamed Din said.
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