The central bank has revised Malaysia’s 2025 GDP growth to 4%-4.8% from 4.5%-5.5% previously, and similarly, the inflation rate for 2025 is projected to range between 1.5% and 2.3% from the previous forecast of 2%-3.5%.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid said BNM is being pragmatic by adjusting the growth forecast lower, taking into account external risks.
At the same time, a lower inflation forecast suggests that the impact from the anticipated RON95 subsidy rationalisation is likely to be manageable.
“As such, we foresee this will be positive for the ringgit in the mid to long term as fiscal consolidation will continue to take place, resulting in more fiscal space which can be redirected into targeted assistance as well as higher development expenditure (DE).
“This Thursday, the government will announce the 13th Malaysia Plan, and we foresee a higher allocation for DE in the next five years to drive the Malaysian economy into high-income status,” he said to Bernama.
Meanwhile, he noted that the US Dollar Index (DXY) has strengthened, buoyed by optimism over the upcoming US-China trade talks.
“The DXY was up 0.5% to 98.13 points as news over US tariffs is seen to be dollar-positive,” he said.
US and Chinese officials are set to meet in Sweden today, with both parties expected to extend the trade truce.
At 6pm, the local note slid to 4.2275/4.2345 versus the greenback from last Friday’s close of 4.2195/4.2245.
At the close, the ringgit ended higher against most major currencies.
It rose against the Japanese yen to 2.8497/2.8546 from 2.8529/2.8565 at the close last Friday, appreciated versus the British pound to 5.6720/5.6814 from 5.6786/5.6853 last week, and edged higher against the euro to 4.9331/4.9412 from 4.9507/4.9566 previously.
However, the ringgit was mixed against regional peers.
It was almost flat against the Indonesian rupiah at 258.3/258.9 from 258.5/258.9 last Friday, gained against the Singapore dollar to 3.2917/3.2974 from 3.2937/3.2978 last week, weakened versus the Thai baht to 13.0511/13.0787 from 13.0268/13.0478, and fell against the Philippine peso to 7.39/7.41 from 7.38/7.40 previously.