Latest news with #BNM
BusinessToday
2 hours ago
- Business
- BusinessToday
Malaysia's GDP Growth Forecast To Slow To 4.3%, BNM Expected To Cut OPR: ICAEW Report
FMIP Malaysia's economy is expected to decelerate in 2025 as external challenges mount, according to the latest Southeast Asia Economic Insight Q2 2025 report by the Institute of Chartered Accountants in England and Wales (ICAEW). The report forecasts Malaysia's GDP growth to slow to 4.3% this year from 5.1% in 2024, citing global trade tensions and waning demand from key partners such as the US and China. Despite a strong start to the year, with goods exports surging 26% year-on-year in April, ICAEW cautions that this uptick is largely due to front-loaded shipments to the US ahead of anticipated tariff hikes. Export growth is expected to cool significantly in the second half of the year, after already slowing to just 1.6% year-on-year in Q1 2025, well below the 7.1% average recorded over the previous three quarters. Malaysia's reliance on global trade—especially with the US, which directly or indirectly accounts for over 4% of GDP and 11% of gross exports—makes it vulnerable to tariff risks. While the US has softened its proposed blanket tariff rate on Malaysian imports to 10% from 24%, the measure still poses a threat to exporters. Meanwhile, weaker demand from China, Malaysia's top export destination, adds further pressure. However, ICAEW sees some bright spots supporting Malaysia's economy: Electrical and Electronics (E&E) exports remain robust, rising about 20% year-to-date on sustained global demand, reinforcing Malaysia's key role in the semiconductor supply chain. The tourism sector continues to rebound, with ASEAN tourists—who made up 67% of arrivals in 2024—driving a 17% year-on-year increase in tourism-related services exports in Q1 2025. 'ASEAN's strength lies in its unity,' said Dato' Mohammad Faiz Azmi, Executive Chairman of the Securities Commission Malaysia and ICAEW Council Member. Speaking at the ASEAN Investment Conference 2025 in Kuala Lumpur, he stressed the importance of regional cooperation in navigating global uncertainties. Monetary Easing Expected to Support Domestic Demand With fiscal space limited due to elevated public debt, ICAEW expects Bank Negara Malaysia (BNM) to take the lead in stimulating the economy. Subdued inflation—hovering around 1.5%—has created room for the central bank to cut its Overnight Policy Rate (OPR) by 50 basis points later in 2025. BNM has already adopted a more accommodative tone to counter risks from softening investment and consumer sentiment. The report highlights a broader economic deceleration trend across key indicators from March 2022 to March 2025, including: Slower GDP growth Weakened private consumption Moderated goods and services exports Nonetheless, ICAEW believes Malaysia's economy will stay on track, thanks to timely policy measures and resilient performance in strategic sectors. Singapore and China Also Facing Slowdowns The ICAEW report also provided updates on other major regional economies with Singapore where GDP contracted 0.6% quarter-on-quarter in Q1 2025, dragged by weak manufacturing and wholesale trade. A temporary export surge in April (+25% YoY) has likely delayed a technical recession. Full-year GDP is forecast at 1.8%, down from 4.4% in 2024, with policy buffers helping cushion the slowdown. As for China, GDP growth is projected to slow to 4.4% in 2025 (2024: 5.0%) amid continued weakness in property, investment, and consumption. Trade truce with the US offers short-term relief, but future tariff uncertainty and deflationary pressures persist. ICAEW adds that Southeast Asian economies need to remain agile, cohesive, and proactive in policy responses to maintain resilience and long-term growth. Related
BusinessToday
6 hours ago
- Business
- BusinessToday
Commentary: Growing Foreign Reserves And What it All Means
Malaysia's central bank, Bank Negara Malaysia (BNM), recently reported an increase in its international reserves, reaching USD119.6 billion as of May 30, 2025, up from USD119.1 billion just two weeks earlier. This modest growth in foreign reserves signals positive developments in Malaysia's economy, reflecting its resilience in navigating global economic challenges. It highlights the country's ability to manage external pressures and provides a buffer against potential financial shocks. However, the key question remains: what does this mean for the everyday citizens? How can we interpret this trend as a sign of a strengthening economy, and how does it translate into tangible benefits for the people? Why Our Money Pile is Growing? One main reason our reserves are increasing is that Malaysia is selling more goods to other countries than it buys. For example, in April 2025, Malaysia sold RM10.5 billion more in goods than it bought, especially in electronics and gas. When we export a lot, more foreign money comes into the country. This extra foreign currency is then kept by BNM as part of its reserves. This shows Malaysia's strength in making and selling important products worldwide. Another big factor is that foreign investors are putting their money into Malaysian government bonds. These bonds offer better returns compared to those in countries like the U.S. or Japan, where interest rates might not be as good anymore. In May 2025 alone, foreign investors brought in RM2.6 billion. When these investors bring in foreign money and convert it to Ringgit to buy our bonds, it directly adds to BNM's foreign currency reserves. This trend highlights that investors trust Malaysia's economy. What This Extra Money Means for Malaysia? Having USD119.6 billion in reserves is a big deal. It means Malaysia has enough foreign money to pay for about 5 months of imported goods and services. This is well above the recommended 3 months by the IMF, a global financial body. This cushion helps Malaysia if import prices go up or if global trade faces problems. Also, these reserves are almost equal to our short-term foreign debts (0.9 times), showing that we don't rely too much on quick foreign loans to run our economy. This strong position makes us less vulnerable to sudden money outflows. Our reserves are also made up of different types of assets, which gives BNM more flexibility. Most of it, USD106.4 billion, is in foreign currencies. We also have USD5.8 billion in Special Drawing Rights (a type of international money from the IMF) and USD3.8 billion in gold. Having this mix of assets helps BNM act fast if there's a global money crisis or if a lot of foreign money suddenly leaves the country. It means BNM has many options to handle financial pressures. Impact on the Ringgit and Economic Policy This steady increase in our foreign reserves suggests that the Malaysian Ringgit might become more stable after being a bit weak. When investors worldwide see Malaysia has strong reserves and can attract foreign money, it makes them see Malaysia as a safe and attractive place among growing economies. This improved perception could boost confidence in the Ringgit, making its value more steady and potentially stronger against other major currencies. If our reserves keep growing, it means BNM will have more room to make decisions about our economy. For instance, BNM might be able to slightly lower interest rates if needed, without worrying too much about the Ringgit losing value or losing trust from investors. This flexibility is very important in today's uncertain global economy, allowing BNM to support Malaysia's economic growth without risking financial stability. Our 'Economic Shield' in a Shaky World Essentially, this rise in Malaysia's international reserves is more than just a number. It's a vital 'economic shield' that gives Malaysia significant power and freedom in managing its money and economy. In a world full of unclear interest rates, political tensions, and unpredictable supply chains, having a big financial buffer is extremely important. This 'shield' helps Malaysia handle unexpected global problems, like a sudden economic slowdown or a quick exit of foreign money, by lessening their impact. It also keeps investors confident, as they know BNM has the resources to protect the Ringgit and keep the financial system stable. Plus, strong reserves allow BNM to support economic growth when necessary, without being held back by a weak financial position. Overall, these strong reserves show Malaysia's smart economic planning and its ability to deal with global financial challenges. Conclusion As a conclusion, the growth in Malaysia's international reserves to USD119.6 billion is unequivocally a positive signal, extending beyond mere financial figures. For the average Malaysian, this translates into tangible benefits, a more stable Ringgit means greater purchasing power for imports and overseas travel, while reduced inflation helps stretch household budgets. Furthermore, these robust reserves act as a crucial national safety net, safeguarding jobs and businesses during global uncertainties and bolstering confidence in our financial system. Ultimately, this increased 'economic shield' empowers BNM to maintain stability and foster sustainable growth, directly enhancing the economic well-being and security of all Malaysians in a volatile global landscape. By Dr. Shahrul Azman Abd Razak Researcher and Islamic Finance Consultant Kuala Nerang, Kedah Related
The Sun
9 hours ago
- Business
- The Sun
BNM's international reserves rise to US$119.9b
KUALA LUMPUR, June 20 (Bernama) -- The international reserves of Bank Negara Malaysia (BNM) increased marginally to US$119.9 billion (US$1=RM4.24) as at June 13, 2025, from US$119.60 billion recorded as at May 30, 2025. In a statement today, the central bank said the reserves position is sufficient to finance 5.0 months of imports of goods and services, and is 0.9 times the total short-term external debt. The main components of the reserves were foreign currency reserves (US$106.7 billion), the International Monetary Fund reserve position (US$1.3 billion), special drawing rights (SDRs) (US$5.8 billion), gold (US$3.8 billion) and other reserve assets (US$2.3 billion). Total assets amounted to RM630.55 billion, comprising gold and foreign exchange and other reserves, including SDRs (RM531.12 billion), Malaysian government papers (RM12.91 billion), deposits with financial institutions (RM4.26 million), loans and advances (RM27.08 billion), land and buildings (RM4.58 billion), and other assets (RM50.57 billion). BNM said total capital and liabilities amounted to RM630.55 billion, comprising paid-up capital (RM100 million), reserves (RM194.93 billion), currency in circulation (RM172.73 billion), deposits by financial institutions (RM127.93 billion), federal government deposits (RM10.53 billion), other deposits (RM82.23 billion), Bank Negara papers (RM10.55 billion), allocation of SDRs (RM28.38 billion), and other liabilities (RM3.13 billion).
Barnama
9 hours ago
- Business
- Barnama
BNM's International Reserves Rise To US$119.9 Bln
KUALA LUMPUR, June 20 (Bernama) -- The international reserves of Bank Negara Malaysia (BNM) increased marginally to US$119.9 billion (US$1=RM4.24) as at June 13, 2025, from US$119.60 billion recorded as at May 30, 2025. In a statement today, the central bank said the reserves position is sufficient to finance 5.0 months of imports of goods and services, and is 0.9 times the total short-term external debt. The main components of the reserves were foreign currency reserves (US$106.7 billion), the International Monetary Fund reserve position (US$1.3 billion), special drawing rights (SDRs) (US$5.8 billion), gold (US$3.8 billion) and other reserve assets (US$2.3 billion).
New Straits Times
10 hours ago
- Business
- New Straits Times
Bank Negara's international reserves rise to US$119.9bil
KUALA LUMPUR: The international reserves of Bank Negara Malaysia (BNM) increased marginally to US$119.9 billion (US$1=RM4.24) as at June 13, 2025, from US$119.60 billion recorded as at May 30, 2025. In a statement today, the central bank said the reserves position is sufficient to finance 5.0 months of imports of goods and services, and is 0.9 times the total short-term external debt. The main components of the reserves were foreign currency reserves (US$106.7 billion), the International Monetary Fund reserve position (US$1.3 billion), special drawing rights (SDRs) (US$5.8 billion), gold (US$3.8 billion) and other reserve assets (US$2.3 billion). Total assets amounted to RM630.55 billion, comprising gold and foreign exchange and other reserves, including SDRs (RM531.12 billion), Malaysian government papers (RM12.91 billion), deposits with financial institutions (RM4.26 million), loans and advances (RM27.08 billion), land and buildings (RM4.58 billion), and other assets (RM50.57 billion). BNM said total capital and liabilities amounted to RM630.55 billion, comprising paid-up capital (RM100 million), reserves (RM194.93 billion), currency in circulation (RM172.73 billion), deposits by financial institutions (RM127.93 billion), federal government deposits (RM10.53 billion), other deposits (RM82.23 billion), Bank Negara papers (RM10.55 billion), allocation of SDRs (RM28.38 billion), and other liabilities (RM3.13 billion).
