The central bank had forecast gross domestic product (GDP) growth to range between 4.5% and 5.5% for 2025, in line with the finance ministry’s (MoF) outlook for the year. The Malaysian economy grew by 5.1% last year.
In a note, CGS International said BNM’s GDP forecast is “more optimistic than market expectations”.
The research house kept its 2025 GDP growth forecast at 4.6%, placing it at the lower end of BNM’s and MoF’s forecast range.
“This implies BNM’s perception of the current economic situation as being slightly on the optimistic side versus the market,” it said.
Public Investment Bank (PublicInvest) said while BNM’s baseline outlook anticipates a continuation of the global trade rebound, the external environment remains fragile.
The prospect of more restrictive US trade measures and retaliatory actions, and escalation of geopolitical tensions, could weigh on global trade flows, dampen demand from key trading partners, and adversely affect Malaysia’s export performance, it noted.
“Heightened uncertainty may also lead to more cautious investment and consumption decisions. Further disruptions to commodity production would add to the downside, particularly if adverse weather conditions persist,” it added.
Should these risks materialise, PublicInvest said GDP growth is likely to trend towards the lower end of the forecast range for 2025.
Trump’s Liberation Day tariffs
Meanwhile, Mercury Securities sees the upcoming US tariff announcement on April 2 as crucial in determining the country’s growth prospects.
US President Donald Trump has dubbed April 2 “Liberation Day” for the US, promising reciprocal tariffs tailored to each trading partner to remedy practices that Washington deems unfair.
“This is particularly important as BNM’s projections rely on the current US tariffs under Trump’s administration, and have not accounted for the new trade measures expected on April 2,” Mercury Securities said.
The mercurial Trump is likely to announce even more taxes on that day, adding to the slew of tariffs that have angered US allies and foes alike, and which could put the brakes on the global economy.
His latest bombshell was the imposition of 25% secondary tariffs on buyers of oil from Venezuela, potentially hitting countries such as India and China.
In dealing with this, Mercury Securities said policy responses and the resilience of key trading partners will be crucial in managing the fallout.
“However, Malaysia’s growing trade diversification and repositioning within the global tech value chain may provide some insulation,” it added.
BNM said this week that domestic demand remains supported by a healthy labour market, strong investment activity, and fiscal policy measures.
“In the face of external uncertainties, domestic demand is expected to remain Malaysia’s anchor of growth amid steady private sector expenditure,” BNM said.
Household spending is expected to increase, driven by employment and faster income growth, as well as policy support, while investment activity will continue to see a robust expansion as the upcycle extends into 2025, it added.
Growth in exports, however, will be moderate, BNM said.