Latest news with #SoutheastAsiaEconomicInsight
BusinessToday
a day 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
The Sun
4 days ago
- Business
- The Sun
Malaysia's 2025 growth to slow on global headwinds
PETALING JAYA: Malaysia's economy is projected to slow in 2025 due to mounting external headwinds, despite a temporary surge in exports early in the year. Resilient demand for electrical and electronics (E&E) products and a recovering tourism sector are expected to buffer economic growth, with Bank Negara Malaysia (BNM) set to proactively support domestic demand through monetary easing amid low inflation. The ICAEW Southeast Asia Economic Insight: Q2'25 report, forecasts Malaysia's GDP growth will moderate to 4.3% in 2025, down from 5.1% in 2024. This slowdown reflects broader global economic uncertainties, particularly stemming from trade tensions and weaker demand from key trading partners, including the US and China. Malaysia's goods exports surged by 26% year-on-year in April 2025, driven by businesses front-loading shipments to the US to avoid impending tariff hikes. However, this is expected to be a temporary boost, with export growth likely to moderate significantly in the second half of the year. The report notes that goods export growth had already slowed notably to 1.6% year-on-year in Q1'25, well below the 7.1% average growth rate recorded over the preceding three quarters. Despite Malaysia's diversified export base, it remains vulnerable to external shocks, with more than 4% of its GDP and approximately 11% of its gross exports tied to US demand, either directly or indirectly, further underscoring the country's vulnerability to external shocks. A blanket US tariff rate of 10% on Malaysian imports, although lower than the initially proposed 24% rate, still poses substantial downside risks for exporters. Additionally, weaker demand from China, Malaysia's largest export destination, creates further threats to Malaysia's external trade environment. Resilient global demand for electronics, crucial as intermediate goods in global supply chains continues to support Malaysia's E&E exports, which have grown by approximately 20% year-to-date. This robust performance is crucial, given Malaysia's key role in the global semiconductor supply chain. Securities Commission Malaysia executive chairman and ICAEW council member Datuk Mohammad Faiz Azmi recently noted that Asean's strength lies in its unity and shared purpose. In a time of global uncertainty, he had said working together and investing within the bloc will be key to unlocking the region's potential. He made the statement during the Asean Investment Conference 2025, held in Kuala Lumpur, where he also emphasised the importance of deepening regional cooperation to ensure resilience against global shocks. Tourism, particularly driven by Asean visitors who accounted for 67% of total tourist arrivals in 2024, remains another critical buffer for economic growth. While tourism-related services exports grew robustly by 17% year-on-year in Q1'25, future visitor arrivals may face headwinds from employment and income uncertainties in key source countries. With elevated public debt constraining fiscal expansion, monetary policy is anticipated to play a pivotal role in supporting the domestic economy. Inflation has remained subdued at around 1.5%, creating room for BNM to introduce a 50 basis-point rate cut later in 2025. The central bank has already signalled an accommodative stance, aiming to mitigate risks stemming from subdued domestic investment and consumer spending. The ICAEW report also highlights economic indicators from March 2022 to March 2025, noting a clear deceleration trend in Malaysia's GDP growth, private consumption, and goods and services exports – emphasising the broader economic slowdown driven by external uncertainties and cautious domestic sentiment. Despite the turbulence, Malaysia's economy is expected to stay on course, supported by resilient key sectors and timely policy action.
New Straits Times
5 days ago
- Business
- New Straits Times
Malaysia's growth to ease in 2025 as global risks mount: ICAEW
KUALA LUMPUR: Malaysia's economy is expected to expand at a slower pace in 2025, with growth moderating to 4.3 per cent from 5.1 per cent in 2024, according to the ICAEW Southeast Asia Economic Insight: Q2 2025 report. The moderation reflects weaker external demand, particularly from major trading partners like the US and China, despite a short-lived boost in exports earlier this year. In April 2025, Malaysia's goods exports jumped 26 per cent year-on-year, largely due to businesses fast-tracking shipments to the US ahead of new tariffs. However, this spike is expected to fade, with export growth forecast to weaken sharply in the second half. The first quarter of 2025 (Q1 2025) saw exports already slow to 1.6 per cent, well below the 7.1 per cent average of the prior three quarters. Malaysia's goods exports surged by 26 per cent year-on-year in April 2025, driven by businesses front-loading shipments to the US to avoid impending tariff hikes. However, ICAEW said this is expected to be a temporary boost, with export growth likely to moderate significantly in the second half of the year. The report noted that goods export growth had already slowed notably to 1.6 per cent year-on-year in Q1 2025, well below the 7.1 per cent average growth rate recorded over the preceding three quarters. "Despite Malaysia's diversified export base, it remains vulnerable to external shocks, with more than 4 per cent of its GDP and approximately 11 per cent of its gross exports tied to US demand, either directly or indirectly, further underscoring the country's vulnerability to external shocks. "A blanket US tariff rate of 10 per cent on Malaysian imports, although lower than the initially proposed 24 per cent rate, still poses substantial downside risks for exporters. "Additionally, weaker demand from China, Malaysia's largest export destination, creates further threats to Malaysia's external trade environment," it said. Datuk Mohammad Faiz Azmi, ICAEW council member and executive chairman of the Securities Commission Malaysia, underscored the importance of regional unity. Speaking at the Asean Investment Conference 2025, he urged deeper intra-bloc collaboration and investment to help buffer the region against global volatility. In a time of global uncertainty, working together and investing within the bloc will be key to unlocking the region's potential, he said. With fiscal space constrained by elevated public debt, Bank Negara Malaysia (BNM) is expected to play a more active role. With inflation steady at 1.5 per cent, the central bank has room to implement a 50 basis-point rate cut later this year to support domestic consumption and investment, ICAEW said. It also highlighted a clear softening trend across GDP, private consumption, and trade indicators between March 2022 and March 2025, reflecting broader caution in the economy.
